Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

PRIVATE BUSINESS

MIDLAND METRO BILL

Lords amendments agreed to.

Oral Answers to Questions — FOREIGN AND COMMONWEALTH AFFAIRS

Cyprus

Mr. Cox: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the present position on the United Nations-sponsored intercommunal talks on Cyprus.

The Minister of State, Foreign and Commonwealth Office (Mr. Francis Maude): The intercommunal talks are stalled at the moment. The United Nations Secretary-General recently met the leaders of the two communities and will shortly present to them his views on how the talks can resume. We hope that this happens soon. We shall continue to give Mr. Perez de Cuellar our full support.

Mr. Cox: While I note that reply, is the Minister aware that President Vassiliou's efforts in seeking to unite the island of Cyprus have sadly come to nothing? As this country is one of the guarantor powers, does the Minister consider that the Government should now start to take a far more involved role and seek to bring together the Governments of Greece and Turkey to work out a settlement that will unite the island of Cyprus once again? How long does he really believe that the United Nations can be expected to carry on alone in this crucial issue?

Mr. Maude: We take our responsibilities in respect of Cyprus extremely seriously, as the hon. Gentleman suggests that we should and as our contribution to the United Nations peacekeeping force indicates. As the hon. Gentleman will recognise, there can be no solution unless the leaders of the two communities reach agreement with each other. To do that, there must be talks. As I have said, we must give full support to the United Nations Secretary-General in his good offices mission to enable that to happen. We very much hope that it will be successful

Mr. Michael Marshall: My hon. Friend will be aware that the next Inter-Parliamentary Union conference is to take place in Cyprus. Will he take this opportunity to assure the House that he will encourage our diplomatic

representatives to facilitate the process of dialogue with all communities in Cyprus, including the freedom of movement which will be necessary in that process?

Mr. Maude: I say again that we shall do all that we sensibly can to encourage the process of dialogue to renew and to encourage the leaders of both communities to come to those talks in a spirit of good will, determined to reach an agreed settlement.

Mr. John D. Taylor: As Turkish Cypriots fully support the United Nations objective of a bizonal independent arid sovereign Cyprus, will the Government confirm that they will act even-handedly to both the Turkish Cypriots arid the Greek Cypriots? Does the Minister agree that intercommunal talks would be better facilitated if there were less provocation by the Greek Cypriots? For example, I refer to the pending visit to Bulgaria by the President of Greek Cyprus—a most tactless move—and the recent display of armaments on 1 October, including missiles and armed helicopters in southern Cyprus.

Mr. Maude: It is no secret that we think that it would be better if the President of Cyprus did not visit Bulgaria. It is important that the talks are renewed and that both sides go to them with good will, determined that the talks succeed. Our approach has been scrupulously evenhanded and will continue to be so.

Mr. Cyril D. Townsend: Should not the Commonwealth be very strongly congratulated on its always outstanding statements on Cyprus? Will my hon. Friend continue to set his face like flint, as did his predecessors, against any form of recognition of the unilateral declaration of independence in the north of Cyprus?

Mr. Maude: I am grateful to my hon. Friend for his compliments, which I accept on behalf of my right hon. Friend the Foreign Secretary who conducted the negotiations at the Heads of Government meeting. On recognition of the north of Cyprus, it remains our view that the declaration of independence was an illegal act.

Mr. Anderson: Does the Minister recall the passage in the Commonwealth communiqué which says that dialogue in the UN-sponsored talks—the intercommunal talks—is the only means by which progress can be made to a peaceful solution? Will he confirm that that at least was one area about which the Prime Minister did not dissent or write a separate document? Will he urge the Turks to use whatever leverage they have with the Turkish Cypriots to end any stalemate, urge them to come to the table on the basis of the United Nations talks and impose no preconditions?

Mr. Maude: The hon. Gentleman's first point is so silly that it does not merit a reply. With regard to his second point, I repeat that we will do what we can to encourage the leaders of both communities to come to the talks in a spirit of good will.

Mr. Gale: Can my hon. Friend confirm that the Government are still totally opposed to the presence of the Turkish army of occupation in northern Cyprus? Will he further confirm that there is no question of Turkey joining the European Community while that army is there?

Mr. Maude: Certainly those are matters which will have to be discussed. It is essential that the Greek Cypriots and the Turkish Cypriots have confidence in any settlement


that is eventually agreed. That is a precondition for any settlement and the matters to which my hon. Friend has referred will have to be discussed and decided upon.

EC Social Charter

Mr. Wallace: To ask the Secretary of State for Foreign and Commonwealth Affairs what is the policy of Her Majesty's Government towards those clauses of the European Community's draft social charter which would ensure the participation of the work force in decision-making within companies.

The Secretary of State for Foreign and Commonwealth Affairs (Mr. John Major): We are fully committed to the principle of employee involvement, but we believe that it would be misguided to harmonise practice throughout Europe. It is for businesses to develop the arrangements that best suit their own circumstances and those of their staff.

Mr. Wallace: May I take this opportunity to congratulate, and possibly sympathise with the right hon. Gentleman, on his first appearance at the Dispatch Box in his new office? Does he agree that there is a public mood that in 1992 with the single market, there will be much more than just a business man's Europe and that employees should be able to participate in some of the objectives including having a better say in the industries in which they work? Can the right hon. Gentleman confirm reports that the French Government are proposing a revised draft of the European social charter in some way to trade off employee rights against closer European monetary integration? What is the Government's response to that? Does he accept that both objectives should be pursued with much greater vigour than the Government have shown hitherto?

Mr. Major: I am grateful to the hon. Gentleman for his congratulations. That was most kind of him. With regard to the social charter, of course the Government accept that there is a social dimension to the Community. Our concern is that the social charter is the wrong way to achieve the objectives that many people want. With regard to the French attitudes, we all wait to see what President Mitterrand has to say in Strasbourg later today.

Sir Anthony Meyer: Since many clauses in the social charter are modelled on British practices or, if amended, could be made acceptable to British practice, would it not be better for my right hon. Friend to exercise his talent for reconciliation to achieve some agreement rather than appear to reject the whole concept out of hand?

Mr. Major: At the moment our concern is that the Commission draft is a confused mixture of general principles and detailed intrusive regulation. We believe that that would have the practical effect of restricting the freedom of workers and employers to negotiate the most suitable arrangements for themselves and their staff. The employers and employees should negotiate those matters and there should be no imposition from above.

Mr. Benn: Is the Government's position not now clearly established, as it was in Kuala Lumpur, in that they sign an agreement and repudiate it later? The Prime Minister

agrees to 1992, but repudiates its implications later. Is that not an example of complete consistency by the Prime Minister and the Foreign Secretary?

Mr. Major: No such agreement signed in Kuala Lumpur was repudiated. The right hon. Member for Chesterfield (Mr. Benn) will be aware of the many Cabinet decisions to which he subscribed which he apparently subsequently denounced in his memoirs.

Mr. Arbuthnot: Can my right hon. Friend confirm that our record on social policy is really rather good compared with that of some of our competitors? Does he also agree that in the circumstances the last thing that we need is a social charter imposed by other countries?

Mr. Major: I can certainly confirm that. The essence of any social policy is to create employment. We have created far more jobs in the United Kingdom over recent years than any of our European partners. That creation of jobs should be the centre of any social dimension.

Mr. Kaufman: May I congratulate the right hon. Gentleman on his appointment and wish him a happy and constructive spell at the Foreign and Commonwealth Office? I assure him that he can rely on security of job tenure at the Foreign Office, unless, of couse, he hears Mr. Charles—[Interruption.]

Mr. Speaker: Order. The question is about the EEC.

Mr. Kaufman: It is indeed, and I was offering my congratulations to the right hon. Gentleman and saying that I hope that his job tenure will be acceptable to him and to Mr. Charles Powell.
Since the right hon. Gentleman has responded to the hon. Member for Orkney and Shetland (Mr. Wallace) by drawing attention to the question of harmonisation, why is it that the Prime Minister traipses from international conference to international conference seeking to wreck harmonisation? She did so at the EC summit—[Interruption.]

Mr. Speaker: Order.

Mr. Kaufman: She did so at the EC summit from a position of total isolation by opposing the social charter, at the NATO summit from a position of total isolation by opposing negotiations on short-range nuclear weapons and at the Commonwealth summit from a position of total isolation by repudiating the agreement that the right hon. Gentleman had negotiated.

Mr. Speaker: Order. I ask for brief questions.

Mr. Kaufman: My question follows directly on the subject of harmonisation. The Prime Minister repudiated an agreement that the right hon. Gentleman had negotiated to fulfil her role as the enthusiastic accomplice of apartheid in South Africa.
Will the right hon. Gentleman—[Interruption.]

Mr. Speaker: Order. I am reluctant to say this to the right hon. Member for Manchester, Gorton (Mr. Kaufman), but such questions take a long time and that is unfair to the House.

Mr. Kaufman: Will the right hon. Gentleman stand up against Mr. Powell on such issues in the same way as the


Chancellor is standing up against Sir Alan Walters? Is he going to be a Foreign Secretary or is he going to be the man who sweeps up after the Lord Mayor's procession?

Mr. Major: First, I am grateful to the right hon. Gentleman for his congratulations. I shall make up my own mind about my responsibilities as Foreign Secretary, as I was appointed to do.
If I might bring the right hon. Gentleman back to the social charter, in terms of bringing harmony he may recall the Madrid agreement of Heads of Government that said that tackling unemployment was the top priority and that there should he a clear respect for subsidiarity. If anyone failed to bring harmony it was the Commission, which wholly ignored the instructions of Heads of Government.

Several Hon. Members: rose——

Mr. Speaker: Order. We are making extremely slow progress. We have dealt with only two questions in about 20 minutes. I ask for brief questions as we shall then receive brief answers.

Mr. Andrew MacKay: Unlike the right hon. Member for Manchester, Gorton (Mr. Kaufman), may I ask a question about the social charter? Is my right hon. Friend aware that most of my colleagues believe that the social charter has no relevance to the single market? We believe that this sovereign Parliament should decide such matters, not the EC.

Mr. Major: I entirely share my hon. Friend's view and that is, of course, what the principle of subsidiarity means.

Hong Kong

Mr. Morley: To ask the Secretary of State for Foreign and Commonwealth Affairs when he next plans to visit Hong Kong; and if he will make a statement.

Mr. Major: I hope to visit Hong Kong early in the new year. Precise dates have not yet been determined.

Mr. Morley: Is the Foreign Secretary somewhat relieved that after the Commonwealth conference's unanimous agreement to a statement on the position in Hong Kong, no member of the Commonwealth repudiated the statement one hour after making it? As the Foreign Secretary moves more towards the idea of compulsory repatriation, and there is much talk of economic migrants as against refugees, how does the right hon. Gentleman intend to determine between economic migrants and genuine refugees in the case of Hong Kong?

Mr. Major: First, on a point of information, the hon. Gentleman may care to know that no communiqué was repudiated—[Interruption.]—by the Government. The communiqué was accepted in its entirety and without demur. However, there were four areas in the communiqué on which I expressly declined to agree with my Commonwealth colleagues and the subsequent press statement set out the British position on those areas. In the case of Hong Kong, the international community has accepted for some time that all those screened out as non-refugees should, in due course, be returned to Vietnam. Ultimately, that is the only possible solution.

Sir Peter Blaker: May I congratulate my right hon. Friend not only on his appointment, but on securing the statement in the communiqué by the Commonwealth

Heads of Government to which he has just referred, relating to the return to Vietnam of those boat people who are determined not to be genuine refugees? How far have my right hon. Friend's talks about monitoring such returns proceeded with the Government of Vietnam?

Mr. Major: Those talks are continuing. I hope that they will be concluded before too long, but, as yet, they are not wholly finished. We are concerned to ensure that when Vietnamese refugees and non-refugees return to Vietnam they are treated properly and fairly and we shall seek to ensure that monitoring arrangements are made to safeguard them.

Mr. Heffer: On a point of order, Mr. Speaker.

Mr. Speaker: Does the point of order arise out of the question?

Mr. Heffer: This is a very important matter, Mr. Speaker. Hon. Members cannot properly hear what is being said. I do not know whether it has anything to do with the new television cameras, but we cannot hear the questions being put to the Minister, or the replies. Hon. Members sitting over here certainly cannot hear. Will you look into this matter, so that we can at least hear what is being said?

Mr. Speaker: Perhaps I should ask hon. Members to speak up. I had some difficulty in hearing the last question—[Interruption.] Order. I shall have the microphones looked into.

Mr. Foulkes: I do not think that my hon. Friend's complaint will apply to me. Will the Secretary of State consider giving some assistance to the Government of Vietnam to help with the refugee settlement programme? Will he also do what he can to ensure proper safeguards and monitoring for the return of refugees? Does he understand that although Opposition Members support encouragement and persuasion to return for those not accepted as refugees, we shall strongly oppose forced repatriation? Will he now rule out force as part of his orderly return programme?

Mr. Major: I shall take the hon. Gentleman's final point first. It is becoming increasingly clear that voluntary repatriation cannot provide the comprehensive solution that is necessary. We are seeking to counsel and persuade the Vietnamese boat people to return to Vietnam. We are receiving the full support of the United Nations High Commissioner for Refugees in doing so. I invite the hon. Gentleman to recognise that the problem in Hong Kong is now acute. It is getting worse and cannot be borne much longer. It will soon be necessary to tackle the thorny question of involuntary repatriation. I shall do that as and when it is necessary. I shall most certainly be seeking safeguards for those people who return, because I regard that as a most important matter.

Mr. Lester: Will my right hon. Friend agree, before he approves any agreement with the Vietnamese Government, to consider the concerns of many colleagues in the House about the prospect of 33,000 Vietnamese non-refugees being forcibly returned to Vietnam? Will he also undertake to consider our views that any aid should be directed to their resettlement—difficult enough in many communities in Vietnam—and that the United Nations or the European Community should examine much more


carefully the rehabilitation of the whole of Vietnam's infrastructure and development, now that it has changed its policy to one of development and a market economy? Unless we do that, many of us will be deeply worried about reluctant or compulsory repatriation, given that people will be returned to the abject poverty from which they have come.

Mr. Major: Vietnam stands a better chance of getting what it wants from the international community if and when it fulfils its international obligations—that point must be understood. The key element is an unequivocal and public commitment by Vietnam to taking back all non-refugees in safety and dignity, and we shall seek that.
I understand my hon. Friend's concerns; I wish there were an easy alternative, but neither he nor anyone else has yet found one. The whole international community made it perfectly clear at Geneva and elsewhere that it was not prepared to take non-refugees. It is therefore not reasonable to accept that they will have to stay in Hong Kong for ever and I cannot, will not and do not accept that—[Interruption.]

Mr. Speaker: Order. May I say to those who are asking questions from a sedentary position that that does not help us to hear?

Afghanistan

Mr. Wareing: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on Her Majesty's Government's policy towards Afghanistan.

Mr. Major: We have consistently supported efforts to replace the present regime in Kabul with a truly representative Government acceptable to the majority of Afghans. That is the necessary preliminary to any lasting settlement and to the voluntary return of Afghan refugees.

Mr. Wareing: It is now nearly six months since the Soviet Union did the right thing and withdrew its troops from Afghanistan. It is perfectly clear that the Government in Kabul is far from being doomed as we were told that it would be, but we do know that the feudal terrorists are pouring rockets into Kabul onto hospitals and buses, and innocent people are being killed. Will the Foreign Secretary assure us that he will use all his energies to ensure that neither the United States nor Pakistan gives succour or arms to these terrorists?

Mr. Major: In view of what the hon. Gentleman has just said, he may be both surprised and shocked to know that in the six months since Russian troops left, 4,000 supply flights from Russia have gone to Najibullah.

Mr. Ron Brown: Does the Minister accept and understand why the regime has not been defeated? It is because the workers, peasants and above all the revolutionary women who support the Government have made it clear that they back enlightened change and reforms. It is about time that this Government understood those things and that one cannot defeat a revolution with popular backing. Despite all the dirty tricks, the regime in Afghanistan will prevail.

Mr. Major: I fear that I cannot agree with the hon. Gentleman. So enlightened is the regime to which he refers that 5 million people have fled from it.

Consular Officials (Spain)

Mr. Baldry: To ask the Secretary of State for Foreign and Commonwealth Affairs how many British nationals consular officials in Spain helped this summer.

The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Tim Sainsbury): Between 1 June and 30 September 1989, British consular posts in Spain received 41,818 visitors and 49,538 telephone inquiries.

Mr. Baldry: I warmly welcome my hon. Friend to his new position. Does he recognise that the whole House wants to thank consuls, and particularly our honorary consuls in Spain, for the work that they undertake on behalf of British nationals? Given that at least 500,000 British nationals are now permanently resident in Spain, is my hon. Friend confident that the present consular set-up is adequate to deal with their legitimate needs—for example, to deal with their pension and other benefit inquiries?

Mr. Sainsbury: I thank my hon. Friend, both for his welcome to me and for what he said about the excellent work done by our consular network in Spain. We have a particularly extensive network of consuls—12 consulates and six honorary consuls—and we keep both the size and the location of that network under review in the light of demands on its services and the resources available to us.

Mr. Dalyell: Is the Minister aware that the all-party heritage committee received great kindness and efficiency from our consul in Seville? Will the Minister give a mind to the problems likely to arise in July when it is a sweltering 110 deg and there is a huge influx of people for Expo? Has that been considered?

Mr. Sainsbury: I am glad to hear from the hon. Member that the all-party committee was well received by our consul in Seville. I note what he said about the problems that could arise during Expo—we are considering them—in the light of the temperature and the demands on resources in that area.

Bulgaria

Mr. Stern: To ask the Secretary of State for Foreign and Commonwealth Affairs what representations have been made to the Bulgarian Government in connection with their policy of Bulgarianisation of the Turkish minority.

The Minister of State, Foreign and Commonwealth Office (Mr. William Waldegrave): We have always used every opportunity to urge the Bulgarian Government to improve their treatment of their Turkish minority. Most recently, I raised this with the Bulgarian ambassador on 20 September.

Mr. Stern: Will my hon. Friend use the influence of the Government and the regard with which our right hon. Friend the Prime Minister is held in both countries to take forward the process of diplomacy between Bulgaria and Turkey so that they start to talk and stop bouncing people backwards and forwards across the frontier?

Mr. Waldegrave: We shall certainly do that and, with our European Community partners, we hope that there


will be a meeting in Kuwait between the Foreign Ministers of the two countries to discuss this issue. I believe that that would be sensible.

Mr. Litherland: Before any representation is made, will the Minister refer to the resolution emanating from the report of, and the in-depth debate that took place in, the Council of Europe in Strasbourg in September, when blame was laid on both countries for the human tragedy and make every effort to bring about a dialogue between the two countries?

Mr. Waldegrave: I am well aware of that report, and I think that the hon. Member's advice is wise.

Mr. Nicholas Winterton: The Bulgarians are treating their Turkish minority population with great brutality. Can my hon. Friend tell the House what replies he got during his recent visit and discussions with the Bulgarian ambassador?

Mr. Waldegrave: The result was not satisfactory. There has long been a policy of Bulgarianisation—making use of the language impossible, and so on. There are some signs that aspects of that are being abandoned. If so, that is welcome, but the huge scale of the movements across the border when it was open show how much pressure those Turkish people have been under.

Mr. Douglas Forsyth

Sir Geoffrey Johnson Smith: To ask the Secretary of State for Foreign and Commonwealth Affairs if his Department will make further representations to the Egyptian Government regarding the failure of the Egyptian authorities to return to Mr. Douglas Forsyth control and possession of his villa in Egypt.

Mr. Sainsbury: No. Mr. Forsyth's father accepted compensation from funds provided by Egypt under the 1959 agreement for the presence of a sitting tenant when the villa was handed back.

Sir Geoffrey Johnson Smith: My hon. Friend will understand that that is a very disappointing reply. Is he aware that the compensation paid to the Forsyth family was in respect of capital depreciation and that there is not a scrap of evidence to support the Foreign Office's contention that that was in any way compensation for loss of the control and possession of their villa, to which they are entitled under the Anglo-Egyptian agreement of 1959? As this family has been virtually defrauded by the attitude of the Foreign Office, will the Minister agree to meet me and the family so that we may see justice done and discuss this very legal point?

Mr. Sainsbury: I congratulate my hon. Friend on the energy and diligence with which he has pursued this case over a long period. He knows that the facts go back a long way. I am unhappy to have to say that our interpretations of the legal position do not agree. The advice I have received does not confirm his view that Mr. Forsyth's father did not receive compensation for the loss of vacant possession of his villa. I shall be happy to see my hon. Friend to discuss the matter further.

Mr. Skinner: Has the Anglo-Egyptian house compensation system been drawn to the attention of the Chancellor of the Exchequer, who got kicked out of his house by the

Prime Minister, acting like Lady Porter? What sort of a points system is the Government running when they kick out a man with a family and kids and put in a bloke who has no family?

Mr. Speaker: Order. I do not think that it is in Egypt, is it?

Mr. Sainsbury: The hon. Gentleman raises his point of view with his usual ingenuity and delicacy. However, I fear that I cannot find any particular connection with the villa in Egypt and Mr. Forsyth.

Lebanon

Mr. Bowis: To ask the Secretary of State for Foreign and Commonwealth Affairs what steps he is taking to promote a cessation of the conflict in the Lebanon.

Mr. Waldegrave: With our European partners we continue to support fully the Arab League committee of three Heads of State in their efforts to bring peace to Lebanon. We welcome the agreement reached at Ta'if by the Lebanese parliamentary deputies.

Mr. Bowis: Does my hon. Friend agree that there will never be peace in the Lebanon while the Syrian occupation troops are there? Does he further agree that there is considerable disquiet that the Arab League agreement, welcome as the efforts have been to reach it, appears to legitimise the position of Syrian troops in the Lebanon? Does he also agree that the Government and people of Britain will never compromise with a regime that has been shown by Amnesty International to be guilty of atrocities and which has been shown by other investigations to be guilty of air terrorism?

Mr. Waldegrave: Our views about some of the activities of the Syrian Government are well known to the House. We believe that it is right and necessary for the sovereignty of Lebanon for all foreign troops, including the troops of the state of Israel, to leave that country. We also strongly believe that in the tragic situation of that country the agreement gives the best hope of restoring proper sovereignty.

Mr. Galloway: The Minister could acknowledge rather more than he has in his answer the extent to which the fly in the ointment, or rather the dangerous angry hornet in the ointment in the Lebanon, is Syria. The Minister welcomes the Ta'if agreement, but surely an agreement that gives the Syrians two years to withdraw from Beirut and an unlimited time to withdraw from the Lebanon as a whole is rather less than perfect.

Mr. Waldegrave: I do not think that it is my job to say whether, ideally, a better agreement could have been written. We think that we have here the beginning of a process that could lead to peace in the Lebanon. We see nothing better on offer. There is certainly no hope of the Syrians being driven by force out of the Lebanon. I agree with the hon. Gentleman that if we are right and the agreement could lead to peace, it will only be if the Syrians withdraw—and the sooner the better.

Mr. Brazier: Does my hon. Friend agree that the record of the Syrians in Lebanon as shown by Amnesty International is one of almost unparalleled brutality? Their record in air terrorism extends from Hindawi to


Lockerbie, yet we are endorsing an agreement reached at Ta'if that would leave the Syrian Army controlling almost every polling station in three quarters of Lebanon to elect a Government who are then supposed to discuss with the Syrians the possibility of their withdrawal.

Mr. Waldegrave: My hon. Friend seems to be endorsing some other solution. We do not see any hope for the Lebanon other than that brought about by the work of the Algerians, the Saudis, the Moroccans and the Arab world as a whole. That is the only hope at present and it is incumbent on all those such as my hon. Friend who wish Lebanon well to do their best to support the agreement.

Ms. Short: While I am sure that all reasonable people agree with the Government that we must back the Arab League's efforts, does the Minister agree that there will not be proper long-term peace in Lebanon without a settlement between the Israelis and the Palestinians? Is it not over time for the British and American Governments to put more pressure on Israel to have proper negotiations with the Palestinians for a settlement there that will assist the achievement of peace in Lebanon?

Mr. Waldegrave: I agree with the hon. Lady that the poison in the whole region is the lack of a settlement of the fundamental problem between the Palestinians and the Israelis. None the less, the restoration of peace and a sovereign Lebanon would do a great deal to help bring about peace in that region as well. My right hon. Friend the Foreign Secretary recently met the Foreign Minister of Israel and once again made our views clear.

Council of Ministers

Mr. Yeo: To ask the Secretary of State for Foreign and Commonwealth Affairs when he last attended the European Council of Ministers; and what subjects were discussed.

Mr. Maude: My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs attended the meeting of the Foreign Affairs Council on 3 October. Issues discussed included the television broadcasting directive, assistance to Poland and Hungary, trade relations with the United States and Japan and renegotiation of the Lomé convention.

Mr. Yeo: Does my hon. Friend agree that enthusiastic British support for rapid progress towards a free market for goods and services inside the Community should be accompanied by robust resistance in the Council of Ministers to some of the bureaucratic lunacies emerging from the Commission?

Mr. Maude: We shall resist bureaucratic lunacies from whatever source they emanate. We look extremely carefully at every Commission proposal to ensure that it is properly framed within the competence of the Communities and under the proper legal base. My hon. Friend is right to draw attention to our enthusiastic support for the completion of the single market, and to our pleasure that this is now broadly following a liberal approach of the sort that we can strongly support.

Sir Russell Johnston: Following the Government's enlightened decision not to sell the Hawk trainer aircraft to Iraq, have they taken the opportunity to follow this

issue up in the European Council, with a view to trying to ensure that the Iraqis do not get the Alpha jet as a substitute?

Mr. Maude: I cannot tell the hon. Gentleman that that matter has been pursued in the Foreign Affairs Council, but certainly my right hon. Friend and I will want to reflect on what he said to see whether that is appropriate.

Mr. Gow: How much satisfaction is given to my hon. Friend by the prospect of one of Her Majesty's Ministers being summoned before the Court of the European Community to answer allegations about the condition of our drinking water?

Mr. Maude: We have every confidence that the quality and standard of our drinking water are exceptionally good. We strongly regret the action that the European Commission has taken. The Commission accepts that we are doing everything that we can to bring water up to the required standard. No one has suggested, not even the Commission, that any time scale more rapid than that which we propose is possible, and its action in taking infraction proceedings against us, as it has done against many other member states, is irrelevant and harmful.

Mr. Robertson: I welcome the Minister to the Dispatch Box on his first appearance as the Minister with responsibility for Europe. His predecessor, the right hon. Member for Wallasey (Mrs. Chalker), was ditched because she showed a slight glimmer of independence of mind. It seems clear from his career that he is in no such danger. Let me bring him back to the subject of the social charter. Why is it, according to today's newspapers, that when even all the other Right-wing champions of the social charter seem willing to accommodate the foot-dragging views of the British Government, we will still not agree to the charter? What sort of Community does the Minister envisage when we stand alone so consistently and regularly against proposals that all our partners believe are essential for the correct working of the single European market?

Mr. Maude: The hon. Member must not be too fulsome in his compliments. I can tell him what sort of social charter we would find acceptable. It would be a charter that accepted the principle that the Heads of Government enunciated at the Madrid Council with respect to the principle of subsidiarity, which leaves as much as possible to the national practices and voluntary traditions in other countries. The present draft of the social charter does not do that. That is a matter of considerable regret, and we hope that there can be further changes that will make it acceptable.

Mr. Aitken: Can my hon. Friend explain why he did not resist signing the television directive, which surely has nothing whatever to do with the creation of a single market? It was condemned by the United States Government representative, Carla Hills, as being one of the worst examples of protectionism and anti-Americanism and fortress Europeanism, and it makes it mandatory for television companies throughout Europe to carry 50 per cent. of European content. This has nothing to do with the single market.

Mr. Maude: I can remember discussing this matter with my hon. Friend on another occasion when I was in my previous role. This is an important measure which does have something to do with the single market, because it


prevents national Governments from erecting barriers to transfrontier broadcasting. It is quite an important single market measure. My hon. Friend may not have read it as carefully as others have. The formulation in the directive makes it clear that it is not possible for countries, the European Commission or national Governments to insist in all circumstances that over 50 per cent. of the programming is of European content. The United States Government made representations at a late stage in the discussions and the formulation that was arrived at was much more liberal than that which was proposed originally, to the extent that considerable embarrassment was caused to the French Government.

Spanish Prime Minister

Mr. Norman Hogg: To ask the Secretary of State for Foreign and Commonwealth Affairs when he last met the Spanish Prime Minister, Felipe Gonzalez, and if the social charter was discussed on that occasion.

Mr. Maude: My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs has not yet met the Spanish Prime Minister.

Mr. Hogg: Is the Minister aware of the briefing given by Commissioner Papandreou in London last week, when she emphasised the flexibility of the social charter and spoke of the plurality of cultures that it contains? Will the Minister give an undertaking that the Government will learn something about consensus and will seek by 1992 to produce a commitment to Europe that at least will provide equality for all the people rather than just for some?

Mr. Maude: I am aware of the briefing that Commissioner Papandreou gave in London last week. The problem is that it is difficult to recognise the social charter, as it is drafted, from the words that the commissioner used.

Mr. Teddy Taylor: Does my hon. Friend agree that he and the Spanish Foreign Secretary should publish explanatory notes for British and Spanish trade unionists and others so that they can be aware that when the directives go through workers who believe that they are not getting union recognition rights, such as those at GCHQ and elsewhere, will be able to go to the European Court instead of this Parliament or their employers, and those who believe that they are not being paid satisfactory wages can go to the European Court instead of this Parliament or their employers? Why do not the Government publish a paper that explains what it is all about so that the British people can know before the directives go through?

Mr. Maude: We have been at some pains to set out our concerns about the draft social charter as it is now framed. Our concerns include those to which my hon. Friend has referred. The more widely these issues are understood, the better it will be.

Mr. Robert Hughes: Will the Minister take the earliest opportunity to express to Mr. Felipe Gonzalez the great outrage in Britain at Spain's refusal to return 30 children in defiance of court orders awarding custody, and despite the fact that Spain is a signatory to both the international convention and the Hague convention on custody? Will

the hon. Gentleman ask the Spanish Government immediately to enact domestic legislation that will give effect to the treaties that they have signed?

Mr. Maude: The hon. Gentleman has raised an important and serious matter which I would wish to examine closely.

Mr. Cash: When my hon. Friend met the Spanish Prime Minister, did the issue of minimum wages within the European Community arise? Did he address the issue in terms of the effect that it would have on jobs and investment in the United Kingdom and elsewhere in the European Community? Did he make it clear that the consequence of having a national minimum wage would be to create havoc for employment prospects here and elsewhere in the Community?

Mr. Maude: The burden of my original answer was that my right hon. Friend had not yet met the Spanish Prime Minister. The points that my hon. Friend makes are very much those with which we seek to argue the case against a prescriptive social charter. I was interested to read in today's newspapers that the UNICE, the Europeanwide body of employers, reflects many of the same concerns, especially the disadvantageous effect that a minimum wage provision would have on the poorer parts of the Community.

International Court of Justice

Mr. Sillars: To ask the Secretary of State for Foreign and Commonwealth Affairs whether there are any proposals aimed at extending the jurisdiction of the International Court of Justice.

Mr. Sainsbury: The non-aligned movement and the Soviet Union have both recently come forward with formal proposals in the United Nations General Assembly for fuller use of the International Court of Justice. The United Kingdom which is one of the minority of United Nations members that accept the compulsory jurisdiction of the court, is carefully considering those ideas.

Mr. Sillars: Would the British Government support a proposition to extend the jurisdiction of the court so that Fourth world nations such as the Kurds, who have been subject to the most appalling tragedies, could take their state to that court?

Mr. Sainsbury: The hon. Gentleman raises an interesting idea, but one which appears clearly to be outside the terms of reference of the International Court of Justice, which is concerned with disputes between member states. I suspect that there would be no little difficulty in defining which or what organisations or bodies should come under the hon. Gentleman's "Fourth world" definition, and who would be responsible for deciding which should qualify.

Sir John Stokes: Is my hon. Friend aware that the International Court of Justice is entirely unlike the English courts of justice, which have given this country justice for many centuries? Is he further aware that judges at the International Court of Justice are political appointees, who are not always especially distinguished? Would we not do far better to stay with the English courts?

Mr. Sainsbury: I am sure that there is no stronger defender of our courts than my hon. Friend. However, the point and purpose of the International Court of Justice is to resolve disputes between states. I suspect that even those who are the greatest admirers of the British system of justice would be reluctant to refer such disputes to our domestic courts.

Mrs. Clwyd: Do the ideas put forward by the United Kingdom include the bringing to justice of war criminals such as Pol Pot, who is responsible for the genocide of up to 1 million people?

Mr. Sainsbury: I must repeat that the International Court of Justice is concerned with disputes between states, not matters involving individuals.

Mr. Kilfedder: Will the Government favourably consider an extension of the jurisdiction of the International Court of Justice as part of, perhaps, a constitutional settlement in Northern Ireland?

Mr. Sainsbury: As I said earlier, as the court is responsible for considering disputes between states, I cannot perceive an immediate application of its power or role in the position suggested by the hon. Gentleman.

Central America

Mr. McKelvey: To ask the Secretary of State for Foreign and Commonwealth Affairs when he last visited central America; and if he will make a statement.

Mr. Sainsbury: My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs has not yet had an opportunity to visit central America. I visited Belize on 5 to 7 October. I hope to visit other countries in the region in due course.

Mr. McKelvey: I hope that the Minister has an opportunity to visit Nicaragua. However, in the event that he might not get there, can he say how much financial assistance the Government are prepared to give to the Nicaraguan Government to ensure free and fair elections next year? Will he consider giving some financial assistance for the training of the officers who have to run the elections? Were not those two of the areas that the British observer noted as having a distinct lack of resources?

Mr. Sainsbury: I am glad to note the hon. Gentleman's concern that there should be free and fair elections in Nicaragua. I hope that that view is shared throughout the House. I hope that the elections will allow equal rights to both the Government and Opposition and a fair opportunity for both of access to the media. These matters are primarily for the Nicaraguan Government, but we have made clear to them our concern that there should be free and fair elections.

Mr. Jacques Arnold: When considering the forthcoming elections in Nicaragua, will my hon. Friend exercise extreme caution in the light of the limitations on free speech in that country, its record on giving fair broadcasting time to the various contenders in elections and its disgraceful record on political prisoners?

Mr. Sainsbury: My hon. Friend voices some of the widely held concerns about the election outlook for Nicaragua. We are sending an official observer—the

highly respected Dr. David Browning—and we shall await with considerable interest his views on the conduct of the elections.

Mr. Watson: Will the Minister report on the outcome of the Prime Minister's meeting with President Cristiani of E1 Salvador in London last month? Will he tell us whether the Prime Minister condemned the increasing violation of human rights in that country where it is estimated that 296 people have either disappeared or been assassinated in the first three months of the ARENA Government? If, as I suspect, the Prime Minister did not voice that condemnation then, will the Minister now do so on behalf of the Prime Minister and her Government?

Mr. Sainsbury: I have made clear to their Foreign Secretary our anxiety about human rights. We condemn abuses of human rights wherever they occur. I hope that the whole House will join me in deploring the particularly reprehensible recent example when the 23-year-old daughter of the commander of the armed forces' centre of studies was shot in her car going to university. That is a breach of human rights which deserves universal condemnation.

Middle East

Mr. Cyril D. Townsend: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the search for peace in the Palestinian/Israeli dispute.

Mr. Archer: To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the middle east peace process.

Mr. Waldegrave: We fully support Egyptian efforts to seek clarification of Mr. Shamir's useful elections proposal and to promote talks in Cairo between the Israeli Government and Palestinians from inside and outside the occupied territories. We look to Israel to respond positively.

Mr. Townsend: Is it my hon. Friend's view that if the Palestinian people were granted the right of self-determination, which they certainly should be under the United Nations charter, they would inevitably voice support for an independent Palestinian state? Has not the time come for the British Government to commit themselves to working towards the creation of such a state in the middle east?

Mr. Waldegrave: We are working towards self-determination. It will then be entirely up to the Palestinians what they choose. The chairman of the PLO has said that they would then seek some form of federation—confederation is probably a better word—with Jordan. Self-determination is the first issue.

Mr. Archer: Is there not a disturbing credibility gap between the protestations of Mr. Arafat that he has renounced terrorism and seeks peace, and the pronouncements of some of his close associates, including Abu Iyad, that the Palestinian strife must escalate in intensity? How are we to reassure the Israelis, at least until Mr. Arafat has publicly repudiated those sentiments?

Mr. Waldegrave: I do not know what more the PNC can do to put on record that it now wishes to negotiate a


way to peace. It is worth noticing that Mr. Arafat is threatened with death by Mr. George Habash and others who oppose that policy. We have said many times in the House that if Israel does not respond within a reasonable time, there are bound to be people in the broad movement of the Palestinians who return to violence.

Sir Dennis Walters: Bearing in mind that the Israeli Government have contemptuously dismissed every peace plan proposal put forward and that the United States Administration seem to be moving very slowly in the direction of putting some pressure on the Israeli Government, will my hon. Friend consider the possibility of a limited European initiative aimed at least at protecting the inhabitants of the West Bank and Gaza who continue to be terrorised by the Israeli occupying forces?

Mr. Waldegrave: Britain and the European Community have increased help for the Palestinians in the occupied territories, and it is right that we should do so. I deplore the increasing economic pressure on Palestinians. It seems wholly self-defeating in terms of finding moderate leaders with whom to negotiate.

Mr. Kaufman: I welcome what the Minister said about the Egyptian 10-point plan. Is the Minister aware that the day before yesterday I had the opportunity in Cairo of discussing it with President Mubarak who made it clear that he framed the plan with the maximum effort to make it palatable to the Israelis? Indeed, General Rabin has made it clear that the Israeli Labour party agrees with the

plan, and Israeli Labour Ministers tabled it in the Israeli Cabinet, where it was rejected. Is the Minister further aware that on Monday I had an opportunity to speak to Mr. Arafat, who made it clear that he was ready to go along with the Egyptian plan and take part with a mind delegation in discussions with the Israelis?
Will the Minister use the particular pressure that the Government can exert on the United States Administration—who are themselves playing a constructive part—so that when Mr. Shamir visits Washington next month it can be made clear to him that he and his party are the sole remaining obstacles to a sensible dialogue to settle the Israeli-Palestinian and middle eastern disputes?

Mr. Waldegrave: I welcome what the right hon. Gentleman has said. I share his understanding and belief that the American and Egyptian Governments—I pay tribute to the skilful diplomacy of the latter in recent months—are trying to build effective and practical bridges over which both sides can advance. If that is to lead anywhere, however, a response from Israel is essential. I do not think that it can possibly be fair for Israel to demand, as its objective, that it be allowed to pick the delegation of Palestinians that would then negotiate in the face-to-face talks that we all hope will begin soon.

Mr. Devlin: On a point of order, Mr. Speaker.

Mr. Speaker: Order. I will take it after the statement.

Social Security Benefits (Uprating)

The Secretary of State for Social Security (Mr. Tony Newton): With permission, Mr. Speaker, I wish to make a statement about the uprating of social security benefits. The statutory instrument necessary to bring my proposals into effect will be laid before both Houses and debated. Uprating will take place for most benefits in the week beginning 9 April next year, the first full week in the tax year. The provisions will apply to both Great Britain and Northern Ireland.
Let me turn first to the main national insurance benefits. As the House knows, the increase in the retail prices index for the year to September 1989—which is the most up-to-date indicator available at the time when the uprating process has to start—is 7·6 per cent.
Our commitment to raise the basic pension in line with that figure will again be fully carried out. It will therefore rise by £3·30 a week for a single person—from £43·60 to £46·90—and by £5·30 a week for a couple—from £69·80 to £75·10. The same percentage increase will be applied to other national insurance benefits—including widows' pensions—to public service pensions, to industrial injuries benefits and to the war pensions scheme—although, in the last case, with some exceptions, in which I propose larger increases to which I will come later in my statement. Unemployment benefit will go up from £34·70 to £37·35 for a single person and from £56·10 to £60·40 for a couple, and sickness benefit from £33·20 to £35·70 for a single person and from £53·75 to £57·80 for a couple.
As for statutory sick pay paid through employers, the welcome growth in occupational sick pay schemes, which now cover more than nine people at work out of every 10, means that the rates that we set often bear little relation to what individuals actually receive in total sick pay. I intend a limited restructuring of the scheme to make it somewhat simpler to run—while concentrating additional resources more on the lowest-paid employees, who are generally less likely to be covered by occupational schemes—and at the same time make a saving of between £70 million and £80 million for the national insurance fund. The dividing line between the higher and lower rates, at present £84, will be set at the point where employers' contributions rise from 7 to 9 per cent., currently £115. The lower rate of SSP will be increased by rather more than the rate of inflation, by £3 to £39·25, and the higher rate by 40p to £52·50. As the standard rate of statutory maternity pay is the same as the lower statutory sick pay rate, that also has the advantage of bringing about a modest real increased entitlement for about 230,000 women.
Next, let me deal with the main long-term sickness and disability benefits. Invalidity benefit will, as usual, go up in line with retirement pension. The associated invalidity allowances will rise by 7·6 per cent., except for a marginally greater increase in the highest rate to take it to £10. Severe disablement allowance and invalid care allowance will both rise from £26·20 to £28·20; mobility allowance, now helping more than half a million people compared with only 100,000 10 years ago, from £24·40 to £26·25; and attendance allowance, now helping more than three quarters of a million compared with only about a quarter of million 10 years ago, from £23·30 to £25·05 at the lower rate and £34·90 to £37·55 at the higher rate.
I turn now to the income-related benefits—income support, housing benefit, community charge benefit and family credit. The index applied here is the retail prices index less housing costs: the use of that index simply reflects the fact that, for those in receipt of such benefits, housing costs are taken into account in their housing benefit itself, or through help with mortgage interest. The increase in that index in the year to September 1989 is 5·2 per cent. The main rates of income-related benefits will be uprated accordingly. The rate for a single person over 25 will go to £36·70, the rate for a single person aged 18 to 24 to £28·80, and the rate for a couple, where one or both are over 18, to twice that, at £57·60. That figure will also be the threshold for calculating family credit. Again, with some exceptions where I propose somewhat larger increases, the premiums will be increased, for example taking the extra payment for pensioners to £11·80 for over-60s, £14·40 for the over-75s, and £17·05 for the over-80s.
The general uprating I have so far described will add more than £2·5 billion to the Department's programme. Separately, we have already implemented two measures this month, to abolish the pensioners' earnings rule and to increase benefits for disabled and older pensioners on income support and housing benefit, which together will cost nearly £600 million next year. In the remainder of this statement, I will detail proposals which will increase expenditure on residential care and nursing homes costing about £100 million and additional measures amounting to around another £200 million in a full year. Those measures will help three groups whose priority is, I believe, recognised in all parts of the House—the less well-off pensioners; low-income families with children, including many lone parents; and the long-term sick and disabled, together with those who care so devotedly for them.
Before describing those measures—and there are some 20 of them—I should make it clear that, against the background of additional expenditure on that scale for the three priority groups, I am not able to propose an increase in child benefit as well. In coming to that conclusion, I have taken account of the fact that an increase in child benefit of itself does nothing for the least well-off—indeed it helps only those who do not receive income support and family credit. I have also taken account of the fact that the take-home pay for those on average male earnings has already increased in the past year by some £16 a week, and will have been further increased by up to £3 a week for the great majority of families as a result of this month's reduction in national insurance contributions—indeed, more where both partners are working. The introduction of independent taxation next April will bring further improvements for many. In these cirumstances, I think it right to concentrate extra help from social security on others.
In that context, I take first the less well-off families receiving family credit or income support. They will of course receive, through the uprating of income-related benefits, the same amount as they would have gained from any general child benefit increase, at a cost of around £100 million. In addition to that, and to some increases for disabled children and their families to which I shall come shortly, I am making five other improvements.
The family premium in income support will be increased from £6·50 to £7·35, which is 50p a week more than a straightforward uprating would have entailed. This will of course carry through into extra entitlement to housing benefit and community charge benefit also.
The adult credit in family credit will be increased from £33·60 to £36·35, which is £1 a week more than would otherwise have occurred, and the child credits will be increased so as to compensate fully for the decision not to uprate child benefit.
The lone parent premium in housing benefit and community charge benefit will be increased by 12·8 per cent. from £8·60 to £9·70. The amount that lone parents can earn without affecting their housing benefit entitlement will be increased from £15 a week to £25 a week. Those two changes will help 95,000 lone parents.
The maternity payment, which is given to those on income support or family credit who have a baby, will be increased by £15 to £100. The total cost of additional measures for the least well-off families is about £70 million in a full year. over and above the £100 million which gives them the full equivalent of a child benefit increase. They will help 1·5 million families, and will in particular give greater encouragement to lone parents who wish to work. They should also reinforce our efforts to increase the number of people who take advantage of family credit. In that regard, I am glad to be able to tell the House that family credit coverage rose by more than 40,000 to over 320,000 between March and July this year, which means that it is providing nearly twice as much help to over 50 per cent. more families than the old family income supplement. We plan a further campaign in the next few months to make it still more effective.
Next, I come to the less well-off pensioners, for whom I propose five beneficial changes. The most important relates to income support for those in residential care or nursing homes, about which much concern was expressed in the House during last week's debate on community care. I intend to increase payments for this purpose, at a cost of more than £100 million, to give increases in the income support limits of £10 a week for virtually every category of home, providing more help for 200,000 elderly and disabled people.
I shall also deal with an anomaly in the amount allowed for the personal expenses of those who are in hospital for a long time, which has the effect of leaving uncovered certain expenses that they continue to incur at home. To help them, the relevant allowance will be increased from 20 to 25 per cent. of the retirement pension—from £8·70 to £11·75 a week.
For elderly couples on income support, the capital rule that governs access to the social fund will be doubled from £500 to £1,000 to help to overcome the anxiety that many of them feel about money set aside for a funeral. For war widows, I shall increase the age allowances from £6·10 to £7 for those aged 65 to 69, from £12·20 to £13·50 for those aged 70 to 79 and from £15·30 to £20 for those who are 80 or over. In each case, that is substantially more than a straightforward uprating, and for the over-80s it is over  £3·50 a week more. I shall also, as was indicated earlier this year, raise from £5 to £10 the amount of war pension or war widows pension that is disregarded in calculating entitlement to income-related benefits.
The full-year cost of those measures, of which the bulk is on residential and nursing care, is £115 million, and they will help 400,000 people. That is over and above the extra £200 million which this month's premium increases will next year be giving to 2·5 million elderly people.
Last, but not least, I come to the needs of long-term sick and disabled people and of those many relatives and others who do so much to help with their care. As a result of the

series of important surveys which we commissioned four years ago from the Office of Population Censuses and Surveys, we now know much more about disabled people and their circumstances. In the light of that, I intend to bring forward, within the next few months, and I hope before the turn of the year, proposals to improve the balance and structure of social security provision for them.
Such changes will necessarily take some time to develop and carry through. Meanwhile, however, there are pressing needs which should not wait, and I intend to make, at the next uprating, or as soon as practicable if the House agrees the necessary legislation, 10 immediate improvements which, for the convenience of the House, I will simply list.
First, the disability premium for adults in income-related benefits will be increased by £1·70 for a single person and £2·60 for a couple. That is £1 and £1·60 more respectively than a straightforward uprating, giving extra help to about 400,000 people.
Secondly, the disability premium for families on income-related benefits with disabled children will be aligned with the adult rate. That will more than double it from £6·50 to £15·40, giving extra help to 20,000 families.
Thirdly, a carers' premium will be introduced into income support for those receiving invalid care allowance, initially at a rate of £10 a week. That will help 30,000 carers.
Fourthly, as has already been announced, attendance allowance will be made available to the terminally ill without the normal six months waiting period. That is expected to help more than 50,000 people by up to £37·55 a week.
Fifthly, we shall now also scrap the rule that prevents payment of attendance allowance for children under two. That will give up to £37·55 a week extra to 3,000 families with severely disabled babies.
Sixthly, in consequence of these extensions of attendance allowance, invalid care allowance at £28·20 a week will also become available to many carers who would not otherwise qualify.
Seventhly, mobility allowance will be extended to the deaf-blind. That will give £26·25 a week more to about 3,000 people.
Eighthly, the amount that those receiving invalid care allowance can earn without affecting their ICA will be increased by 66 per cent., from £12 to £20 a week.
Ninthly, the amount that people on invalidity benefit or severe disablement allowance can earn without affecting those benefits, provided the work is medically certified as beneficial, will go up by 23 per cent. from £28·50 a week to £35 a week and they will be able to keep their benefit when they go on an employment rehabilitation course instead of the existing rehabilitation allowance which may be lower by £20 or more.
Tenthly, the independent living fund, which has proved so successful in assisting many exceptionally severely disabled people with their very special needs, for which the original provision for this year was £5 million, is being doubled immediately to over £10 million, and will be more than doubled again next year to more than £20 million.
The total full-year cost of these measures, over and above the normal uprating of disability benefits generally, will be about £100 million a year. They will improve the incomes of more than 500,000 seriously ill or disabled people and carers, in some cases by very substantial amounts. To give the House just one example, a family


with a very severely disabled baby, where one of the parents is staying at home as carer, will get more than £65 a week extra. A full schedule of the new benefit rates is in the Vote Office.
Next year, for the first time, social security spending will be over £1 billion each and every week. The new measures that I have described confirm the capacity of our reformed benefit system to focus more quickly and effectively on those with a special claim to our help. They will reinforce our policies for care in the community, and they underline our commitment to ensure that our country's greater prosperity is widely shared.

Following are the details:


Schedule of main proposed Social Security benefit rates from April 1990


Weekly rates unless otherwise shown
Old rates 1989
New rates 1990


Attendance allowance


higher rate
34·90
37·55


lower rate
23·30
25·05


Child benefit—each child
7·25
7·25


Child's special allowance
8·95
9·65


Community charge benefit


Personal allowances


single


18 to 24
27·40
28·80


20 or over
34·90
36·70


lone parent—18 or over
34·90
36·70


couple—one or both over 18
54·80
57·60


dependent children


under 11
11·75
12·35


11 to 15
17·35
18·25


16 to 17
20·80
21·90


18
27·40
28·80


Premiums


family
6·50
7·35


lone parent
8·60
9·70


pensioner


single
11·20
11·80


couple
17·05
17·95


pensioner (enhanced)


single
13·70
14·40


couple
20·55
21·60


pensioner (higher)


single
16·20
17·05


couple
23·00
24·25


disability


single
13·70
15·40


couple
19·50
22·10


severe disability


single
26·20
28·20


couple (one qualifies)
26·20
28·20


couple (both qualify)
52·40
56·40


disabled child
6·50
15·40


carers (from October 1990)

10·00


Allowance for personal expenses for claimants in hospital
8·70
11·75


Capital


upper limit
8,000·00
8,000·00


amount disregarded
3,000·00
3,000·00

Weekly rates unless otherwise shown
Old rates 1989
New rates 1990


child's limit
3,000·00
3,000·00


Tariff income


£1 for every complete £250 or part thereof between amount of capital disregarded and capital upper limit


Earnings disregards


where disability premium awarded
15·00
15·00


various specified employments
15·00
15·00


lone parent—in receipt of IS
15·00
15·00


lone parent—not in receipt of IS (from October 1990)
15·00
25·00


where the claimant has a partner
10·00
10·00


single claimant
5·00
5·00


Other income disregards


war disablement pension and war widows pension
5·00
10·00


voluntary and charitable payments
5·00
5·00


student's covenanted income
5·00
5·00


Expenses for subtenants


furnished or unfurnished
4·00
4·00


where heating is included, additional
7·00
7·35


Dependency increases


Adult Dependency increases For spouse or person looking after children, with:—


retirement pension on own insurance invalidity pension, unemployability supplement and, if beneficiary over pension age, unemployment benefit
26·20
28·20


non-contributory retirement pension, invalid care allowance and severe disablement allowance
15·65
16·65


sickness benefit if beneficiary over pension age
25·10
27·00


unemployment benefit
21·40
23·05


maternity allowance/sickness benefit
20·55
22·10


Child Dependency increases For each child with:—


retirement pension, widows benefit, invalidity benefit, invalid care allowance, severe disablement allowance, higher rate industrial death benefit, unemployability supplement and sickness/unemployment benefit if beneficiary over pension age
8·95
9·65


Earnings rules


Invalid care allowance
12·00
20·00


Unemployment benefit (daily rate)
2·00
2·00


Therapeutic earnings limit
28·50
35·00


Industrial injuries unemployability supplement permitted earnings level (annual amount)
1,482·00
1,820·00


War pensioners' unemployability supplement permitted earnings level (annual amount)
1,482·00
1,820·00


Adult dependency increases with sickness benefit where claimant is


(a) under pension age
20·55
22·10


(b) over pension age
25·10
27·00


maternity allowance
20·55
22·10


unemployment benefit where claimant is


(a) under pension age
21·40
23·05

Weekly rates unless otherwise shown
Old rates 1989
New rates 1990


(b) over pension age
26·20
28·20


retirement pension, invalidity pension, severe disablement allowance, unemployability supplement where dependant


(a) is living with claimant
34·70
37·35


(b) still qualifies for the tapered earnings rule
45·09
45·09


retirement pension, invalidity pension and unemployability supplement where dependant not living with claimant
26·20
28·20


severe disablement allowance where dependant not living with claimant
15·65
16·85


invalid care allowance
15·65
16·85


Child dependency increases level at which CDIs payable with long·term benefits are affected by earnings of claimant's spouse or partner


for first child
95·00
100·00


for each subsequent child
12·00
13·00


Family credit


Adult credit
33·60
36·5


Child credit


under 11
7·30
8·25


11 to 15
12·90
14·15


16 to 17
16·35
17·80


18
23·30
25·10


Applicable amount (ie taper threshold)
54·80
57·60


Capital


upper limit
6,000·00
6,000·00


amount disregarded
3,000·00
3,000·00


child's limit
3,000·00
3,000·00


Tariff income


£1 for every complete £250 or part thereof between amount of capital disregarded and capital upper limit


Disregards


war disablement pension and war widows pension
5·00
10·00


voluntary and charitable payments
5·00
5·00


student's covenanted income
5·00
5·00


Expenses for subtenants


furnished or unfurnished
4·00
4·00


where heating is included, additional
7·00
7·35


Guardian's allowance—each child
8·95
9·65


Hospital downrating


20 per cent, rate
8·70
9·40


40 per cent, rate
17·40
18·80


Housing benefit


Personal allowances


single


16 to 24
27·40
28·80


25 or over
34·90
36·70


lone parent


under 18
27·40
28·80


18 or over
34·90
36·70


couple


both under 18
41·60
43·80


one or both over 18
54·80
57·60


dependent children


under 11
11·75
12·35


11 to 15
17·35
18·25

Weekly rates unless otherwise shown
Old rates 1989
New rates 1990


16 to 17
20·80
21·90


18
27·40
28·80


Premiums


family
6·50
7·35


lone parent
6·60
9·70


pensioner


single
11·20
11·80


couple
17·05
17·95


pensioner (enhanced)


single
13·70
14·40


couple
20·55
21·60


pensioner (higher)


single
16·20
17·05


couple
23·00
24·25


disability


single
13·70
15·40


couple
19·50
22·10


severe disability


single
26·20
28·20


couple (one qualifies)
26·20
28·20


couple (both qualify)
52·40
56·40


disabled child
6·50
15·40


carers (from October 1990)

10·00


Allowance for personal expenses for claimants in hospital
8·70
11·75


Non-dependant deductions


rent rebates and allowances aged 18 or over and in remunerative work
9·15
10·85


others, aged 18 or over, or on Income Support and over 25
3·85
4·55


low earnings threshold
52·10
56·05


Service charges for fuel


heating
7·00
7·35


hot water
0·85
0·90


lighting
0·55
0·60


cooking
0·85
0·90


all fuel
9·25
9·75


Amount ineligible for meals


three or more meals a day single claimant
12·50
13·15


each person in family aged 16 or over
12·50
13·15


each child under 16
6·25
6·60


less than three meals a day


single claimant
8·30
8·75


each person in family aged 16 or over
8·30
8·75


each child under 16
4·15
4·35


breakfast only—claimant and each member of family
1·50
1·60


Capital


upper limit
8,000·00
8,000·00


amount disregarded
3,000·00
3,000·00


child's limit
3,000·00
3,000·00


Tariff income


£1 for every complete £250 or part thereof between amount of capital disregarded and capital upper limit


Earnings disregards


where disability premium awarded
15·00
15·00


various specified employments
15·00
15·00


lone parent—in receipt of IS
15·00
15·00


lone parent—not in receipt of IS (from October 1990)
15·00
25·00


where the claimant has a partner
10·00
10·00

Weekly rates unless otherwise shown
Old rates 1989
New rates 1990


single claimant
5·00
5·00


Other income disregards


war disablement pension and war widows pension
5·00
10·00


voluntary and charitable payments
5·00
5·00


student's covenanted income
5·00
5·00


Expenses for subtenants


furnished or unfurnished
4·00
4·00


where heating is included, additional
7·00
7·35


Income Support


Personal allowances


single


under 18—usual rate
20·80
21·90


under 18—higher rate payable in specific circumstances
27·40
28·80


18 to 24
27·40
28·80


25 or over
34·90
36·70


lone parent


under 18—usual rate
20·80
21·90


under 18—higher rate payable in specific circumstances
27·40
28·80


18 or over
34·90
36·70


couple


both under 18
41·60
43·80


one or both over 18
54·80
57·60


dependent children


under 11
11·75
12·35


11 to 15
17·35
18·25


16 to 17
20·80
21·90


18
27·40
28·80


Premiums


family
6·50
7·35


lone parent
3·90
4·10


pensioner


single
11·20
11·80


couple
17·05
17·95


pensioner (enhanced)


single
13·70
14·40


couple
20·55
21·60


pensioner (higher)


single
16·20
17·05


couple
23·00
24·25


disability


single
13·70
15·40


couple
19·50
22·10


severe disability


single
26·20
28·20


couple (one qualifies)
26·20
28·20


couple (both qualify)
52·40
56·40


disabled child
6·50
15·40


carers (from October 1990)

10·00


Maximum amounts for accommodation and meals in residential care homes


old age
140·00
150·00


very dependent elderly
155·00
165·00


mental disorder (not handicap)
140·00
150·00


drug/alcohol dependence
140·00
150·00


mental handicap
165·00
175·00


physical disablement


(a) (under pension age)
200·00
210·00

Weekly rates unless otherwise shown
Old rates 1989
New rates 1990


(b) (over pension age)
140·00
150·00


others
140·00
150·00


maximum Greater London increase
23·00
23·00


nursing homes


mental disorder (not handicap)
195·00
200·00


drug/alcohol dependence
190·00
200·00


mental handicap
205·00
215·00


terminal illness
235·00
245·00


physical disablement


(a) (under pension age)
235·00
245·00


(b) (over pension age)
190·00
200·00


others (including elderly)
190·00
200·00


maximum Greater London increase
23·00
23·00


Amounts for meals where these cannot be purchased within the accommodation (daily rate)


breakfast
1·10
1·10


midday meal
1·55
1·55


evening meal
1·55
1·55


Allowances for personal expenses for claimants in private and voluntary residential care and nursing homes personal allowance
10·05
10·55


dependent children


(a) Under 11
5·10
4·30


(b) 11 to 15
6·05
6·35


(c) 16 to 17
7·00
7·35


(d) age 18
10·05
10·55


hospital
8·70
11·75


local authority (Pt III) accommodation
8·70
9·40


the Polish home Ilford Park


maximum amount for accommodation and meals
140·00
150·00


personal expenses for claimant
13·25
13·95


personal expenses for partner
13·25
13·95


personal expenses for dependent children


(a) Under 11
4·10
4·30


(b) 11 to 15
6·05
6·35


(c) 16 to 17
7·00
7·35


(d) age 18
11·95
12·55


Housing costs


deduction for non-dependants


aged 18 or over and in remunerative work
9·15
10·85


others, aged 18 or over, or on Income Support and over 25
3·85
4·55


low earnings threshold
52·10
56·05


Deduction for direct payments


fuel debt 5 per cent, rate
1·75
1·85


fuel debt 10 per cent, rate
3·50
3·70


arrears of housing costs
1·75
1·85


arrears of water rates
1·75
1·85


Deductions for arrears of Community Charge


single debtor
1·75
1·85


couple debtors both with IS
2·75
2·90


Reduction in benefit for strikers
18·50
19·50


Capital


upper limit
6,000·00
6,000·00


amount disregarded
3,000·00
3,000·00


child's limit
3,000·00
3.000·00


Tariff income


£1 for every complete £250 or part thereof between amount of capital disregarded and capital upper limit

Weekly rates unless otherwise shown
Old rates 1989
New rates 1990


Disregards


standard earnings
5·00
5·00


higher earnings
15·00
15·00


war disablement pension and war widows pension
5·00
10·00


voluntary and charitable payments
5·00
5·00


student's convenanted income
5·00
5·00


Expenses for subtenants


furnished or unfurnished
4·00
4·00


where heating is included, additional
7·00
7·35


Industrial death benefit


Widow's pension


higher rate
43·60
46·90


lower rate
13·08
14·07


Industrial disablement pension


18 and over, or under 18 with dependants


100 per cent.
71·20
76·60


90 per cent.
64·08
68·94


80 per cent.
56·96
61·28


70 per cent.
49·84
53·62


60 per cent.
42·72
45·96


50 per cent.
35·60
38·30


40 per cent.
28·48
30·64


30 per cent.
21·36
22·98


20 per cent.
14·24
15·32


Under 18


100 per cent.
43·60
46·90


90 per cent.
39·24
42·21


80 per cent.
34·88
37·52


70 per cent.
30·52
32·83


60 per cent.
26·16
28·14


50 per cent.
21·80
23·45


40 per cent.
17·44
18·76


30 per cent.
13·08
14·07


20 per cent.
8·72
9·38


Maximum life gratuity (lump sum)
4,730·00
5,090·00


Unemployability Supplement
43·60
46·90


plus where appropriate an increase for early incapacity


higher rate
9·20
10·00


middle rate
5·80
6·20


lower rate
2·90
3·10


Maximum special hardship allowance/ reduced earnings allowance
28·48
30·64


Maximum retirement allowance
7·12
7·66


Constant attendance allowance


exceptional rate
57·00
61·40


intermediate rate
42·75
46·05


normal maximum rate
28·50
30·70


part·time rate
14·25
15·35


Exceptionally severe disablement allowance
28·50
30·70


Invalid care allowance
26·20
28·20


Invalidity benefit


Invalidity pension
43·60
46·90


Invalidity allowance


higher rate
9·20
10·00


middle rate
5·80
6·20


lower rate
2·90
31·0


Maternity allowance
33·20
35·70


Maternity payment
85·00
100·00

Weekly rates unless otherwise shown
Old rates 1989
New rates 1990


Mobility allowance
24·40
26·25


One·parent benefit
5·20
5·60


Pneumoconiosis, byssinosis, workmen's compensation (supplementation) and other schemes


Total disablement allowance and major incapacity allowance (maximum)
71·20
76·60


Partial disablement allowance
26·20
28·20


Unemployment supplement plus where appropriate increases for early incapacity
43·60
46·90


higher rate
9·20
10·00


middle rate
5·80
6·20


lower rate
2·90
3·10


Constant attendance allowance


exceptional rate
57·00
61·40


intermediate rate
42·75
46·05


normal maximum rate
28·50
30·70


part-time rate
14·25
15·35


Exceptionally severe disablement allowance
28·50
30·70


Lesser incapacity allowance


maximum rate of allowance
26·20
28·20


based on loss of earnings over
34·90
37·55


Retirement pension


Category A or B
43·60
46·90


Category B (lower)—husband's insurance
26·20
28·20


Category C or D—non·contributory
26·20
28·20


Category C (lower)—non·contributory
15·65
16·85


Additional pension
(increased by 7·6%)


Increments to basic and additional pension, contracted out deductions (from pre April 1988 earnings) and graduated retirement benefit
(increased by 7·6%)


Contrated out deductions and increments to contracted out decuctions (from post April 1988 earnings1)
(increased by 4·6%)


Graduated retirement benefit (unit)(pence)
5·71
6·14


Addition at age 80
·25
·25


Severe disablement allowance
26·20
28·20


Sickness benefit


Over pension age
41·80
45·00


Under pension age
33·20
35·70


Social fund


Capital limit—aged 60 and over
500·00
1,000·00


Statutory maternity pay


Earnings threshold
43·00
46·00


Lower rate
36·25
39·25


Statutory sick pay


Earnings threshold
43·00
46·00


Standard rate threshold
84·00
125·00


Lower rate
36·25
39·25


Standard rate
52·10
52·50


Unemployment benefit


Over pension age
43·60
46·90

Weekly rates unless otherwise shown
Old rates 1989
New rates 1990


Under pension age
34·70
37·35


Occupational pension abatement
35·00
35·00


War pensions


Disablement pension (100 per cent, rates)


private or equivalent
71·20
76·60


officer (£ per annum)
3,712·00
3,994·00


Age allowances


40 per cent.-50 per cent.
5·00
5·40


over 50 per cent, but not over 70 per cent.
7·75
8·35


over 70 per cent, but not over 90 per cent.
11·10
11·95


over 90 per cent.
15·50
16·70


Disablement gratuity (base figures for calculation purposes only)


specified minor injury
4,730·00
5,090·00


unspecified minor injury
2,601·50
2,799·50


Unemployability allowance


personal
46·30
49·80


adult dependency increase
26·20
28·20


increase for each child
8·95
9·65


Invalidity allowance


higher rate
9·20
10·00


middle rate
5·80
6·20


lower rate
2·90
3·10


Constant attendance allowance


exceptional rate
57·00
61·40


intermediate rate
42·75
46·05


normal maximum rate
28·50
30·70


part-time rate
14·25
15·35


Comforts allowance


higher rate
12·30
13·20


lower rate
6·15
6·60


Mobility supplement
27·10
29·15


Allowance for lowered standard of occupation (maximum)
28·48
30·64


Exceptionally severe disablement allowance
28·50
30·70


Severe disablement occupational allowance
14·25
15·35


Clothing allowance (£ per annum)


higher rate
97·00
104·00


lower rate
61·00
66·00


Education allowance (£ per annum) (maximum)
120·00
120·00


War widow's pension (private)


widow
56·65
60·95


childless widow under 40 age allowance
13·08
14·07


(a) age 65 to 69
6·10
7·00


(b) age 70 to 79
12·20
13·50


(c) age 80 and over
15·30
20·00


children's allowance
12·60
13·40


Orphan's pension
13·80
14·70


Unmarried dependant living as spouse (maximum)
54·60
58·90


Rent allowance (maximum)
21·55
23·20

Weekly rates unless otherwise shown
Old rates 1989
New rates 1990


Adult orphan's pension (maximum)
43·60
46·90


Widower's pension (maximum)
56·65
60·95


Widow's benefit


Widow's payment (lump sum)
1,000·00
1,000·00


Widowed mother's allowance
43·60
46·90


Widow's pension


standard rate
43·60
46·90


age related


age 54 (49)
40·55
43·62


53 (48)
37·50
40·33


52 (47)
34·44
37·05


51 (46)
31·39
33·77


50 (45)
28·34
30·49


49 (44)
25·29
27·20


48 (43)
22·24
23·92


47 (42)
19·18
20·64


46 (41)
16·13
17·35


45 (40)
13·08
14·07


1 Contracted out deductions and increments (post April 1988). Scheme is responsible for 3 per cent. Balance of 4·6 per cent, paid by State.

Note:

For deaths occuring before 11 April 1988 refer to age-points shown in brackets.

Mr. Robin Cook: May I begin with those parts of the statement to which the Opposition can give an unqualified welcome? First, we warmly welcome the introduction of a carers' premium on income support. As the Secretary of State will be aware, it remedies one of the worst injustices of the cuts of last April, when carers found themselves the sole group on long-term supplementary benefit who were denied any premium on the transfer to income support. We welcome the introduction of such a premium. We regret that, for the past two years, carers have been left without it.
We also welcome the changes to attendance allowance, particularly the extension of attendance allowance to the terminally ill and to children under two. The Secretary of State will have had it pointed out to him, I am sure, that during the course of the Social Security Act 1988 my hon. Friends the Members for Preston (Mrs. Wise) and for Coventry, South-East (Mr. Nellist) were particularly vigorous in pressing that point on the Government and, at the time, the Government were particularly vigorous in resisting both changes.
But the Secretary of State cannot pretend that the comparatively minor changes that he has just announced to disability benefits are the comprehensive review of disability benefits that we were promised after the study conducted by the Office of Population Censuses and Surveys. As the Secretary of State is aware, that survey identified 6·5 million disabled people in Britain——

The Minister for Social Security (Mr. Nicholas Scott): It was 6·25 million.

Mr. Cook: —my figure includes the under 16-year-olds—whose needs cannot possibly be met by an additional £100 million. Neither can an extra £1 on the disability premium possibly meet the depths of poverty revealed by


the OPCS study. May I, therefore, press the Secretary of State to make it clear that he remains committed to that comprehensive review of disability benefits?
I also congratulate the Secretary of State on having recruited another 40,000 claimants to family credit. I congratulate him on the fact that that brings the numbers up to two thirds of the number that the Secretary of State originally predicted would be on family credit. In case any hon. Members consider that family credit is now an efficient benefit, will the Secretary of State confirm that the additional numbers that he has announced today have been purchased by advertising expenditure which works out at £120 for every additional claimant? The extraordinary advertising costs necessary to recruit that modest increase makes it all the more incomprehensible that the Secretary of State has chosen to freeze child benefit, which, without advertising, reaches 98 per cent. of mothers.
May I at least congratulate the Secretary of State on Monday's Lobby briefing, in that he attempted to persuade the Treasury to let him uprate child benefit. Upon which arguments did he place the greatest stress in his negotiations with the Treasury? Did he place greatest stress on the dishonour brought on the Conservative party by a freeze in child benefit for the third year running since the general election during which every Conservative Member stood on a manifesto that pledged them to continue child benefit? Or did the Secretary of State stress the dishonesty of pretending that he had carried out his annual duty to review the level of child benefit? Is he aware that over the past three years of the freeze, the level of child benefit has sunk by a fifth?
Which mother did the Secretary of State meet in the course of his review who told him that the cost of bringing up a child has gone down by a fifth over the same period? Or did the Secretary of State point out to the Treasury the sheer hypocrisy of a party that boasts of being the party of the family, which cannot find an extra 50p for the family budget? Does not the Secretary of State understand that so many young mothers with small children live in first-time buyers' homes where budgets have been wrecked by Conservative mortgage rates? Will the Secretary of State now at least find the courage to do the House the courtesy of informing the House and the nation that he is a member of a Cabinet which wants to be rid of child benefit and that Britain, as it limps towards 1992, is the only country with a Government who are not prepared to recognise anywhere in the benefit or tax system the extra cost of families with children?
The Secretary of State has again increased income support by the retail prices index less housing costs. Will he confirm that this year that reduces the increase by one third? In view of the large difference between the increase in income support and the increase in national insurance benefits, how many pensioners are likely to find themselves floated off entitlement to means-tested benefit?
I want to press the Secretary of State about two particularly desperate groups on income support. The Secretary of State referred to the thousands of old people who have been encouraged to go into private nursing homes on the assurance that the Department of Social Security will meet their costs. They now find that the benefit does not cover their bills. Is the Secretary of State aware that many of my hon. Friends have cases in their constituencies where the gap between the old person's benefit and the private home fee is £30, £40 or £50 a week?

An increase of £10 a week in the benefit will go nowhere towards plugging that gap. Will the Secretary of State admit that the £10 he has just announced is no more than the 5·2 per cent. increase to which they are entitled on a weekly payment of £190?
The fees of those homes will go up by more than £10 this year and that will leave old people with a further gap to meet if they are to keep a roof over their heads.
May I press the Secretary of State on a group whom he omitted from his statement and who are on income support? I refer to the stark desperation of the 200,000 claimants who are entitled to no increase because they are still on transitional protection and to whom today's statement is wholly irrelevant. Next April will be the third year running in which they have had no increase. They still need the extra heating and the special diet for which they used to get allowances, but which they now cannot afford. I plead with the Secretary of State for an amnesty for those cases on transitional protection so that they may get the full uprating.
The Secretary of State has again announced an increase in the basic state pension, but it is not a penny over the minimum necessary to match price increases. Will he confirm that if the link with earnings had been preserved under his Government, the figures he has announced today for the state pension would have meant an increase in the single person's pension of £12·65 over the present level and, on the married person's pension, of £20 a week over the present level? Is he aware that, last April, the cumulative total in the national insurance fund was a record surplus of £9,900 million? Why will the Treasury not let him spend some of that surplus on the pensions for which working people have paid their contributions to that fund?
Is he aware that, this year, the cost to the national insurance fund of the 2 per cent. bribe in personal persons schemes is already £1·5 billion over budget? Will he confirm that that sum alone would have doubled the sum he announced today relating to the increase in the state pension? If he really believes in targeting, surely it would be better to target that expenditure to help pensioners in poverty than to subsidise the private pensions industry.
The Secretary of State will be aware that during the 11 years of this Government the basic pension has gone up by a beggarly 2 per cent. in real terms. In the five years of the previous Labour Government it went up by 20 per cent. in real terms. Those figures show up the different priorities we attach to the state pension.
Since the Secretary of State has said that his announcement is intended to ensure that the greater prosperity of the nation gets through to those on benefit, why does he not go back to the Treasury and remind the Chancellor of his many speeches on Britain's economic miracle? He should ask his right hon. Friend when that greater prosperity will get through to the millions of pensioners dependent on the basic state pension, who should not be abandoned in their old age to the stress and distress of a life in poverty.

Mr. Newton: I would have found the latter part of the hon. Gentleman's remarks somewhat more credible but for the fact that the previous Labour Government were unable even to sustain their own undertakings about the way in which they would uprate retirement pensions; and but for the fact that pensioners' average total net incomes have been rising far faster under this Government than


under the previous Labour Government. The latest figures show that, between 1979 and 1986, those incomes rose by 23 per cent. against only 0·6 per cent. a year, or 3 per cent. over the whole period when the hon. Gentleman and his friends were in office. The principal reason for that was, of course, the roaring inflation over which the Labour Government presided.
The second principal reason for the substantial increase in pensioners' average net incomes going far beyond what occurred under the previous Labour Government is the very growth of occupational and other pension schemes, which we have been sucessfully encouraging still further by the development of personal pensions.
The hon. Gentleman made several observations about family credit, child benefit and the review of benefits for disabled people. I shall refer to each of them. First, as I emphasised in my statement, the key point about family credit is that that benefit is now far more effective than the old family income supplement in taking substantial help to the less well-off families in work. The effectiveness of that benefit will be further increased by the steps that I have taken today. I make no apology for the scale and importance of the advertising campaign that we have mounted to ensure that that benefit is effective. We shall continue with the campaign.
As for disability benefits, I note with some pleasure the hon. Gentleman's welcome—albeit grudgingly—at least for the range of new improvements that I announced at the conclusion of my statement. If the hon. Gentleman had been listening to my statement with the care that I would have hoped for, he would have heard me say clearly that it is a package of immediate improvements and that within a few months—by the turn of the year, I hope—the Government will be coming forward with a fuller and more strategic response to the information that we have gained from the OPCS surveys. That is absolutely clear. There is no way in which I am suggesting that what I have announced today—important though it is—is the full and final answer to the greater information that we now have available.
Finally, I refer briefly to the hon. Gentleman's comments on child benefit. I shall tell the hon. Gentleman what I had in mind in considering the balance—it had to be a balance—between increasing child benefit and doing a variety of other things. It was against a background of rising real incomes for those in work and of further improvements in their position through the reduction in national insurance contributions that have already taken place and that are likely to occur in other ways as a result of changes in taxation, to which I also referred, that I came firmly to the conclusion that I would rather spend the sum of money that I outlined in my statement on the less well-off families, the poorer pensioners and on the sick and disabled and their carers. I believe that that sense of priorities will be widely shared.

Several Hon. Members: rose——

Mr. Speaker: Order. I draw the attention of the House to the fact that we have a heavy day ahead of us. The Secretary of State mentioned in his opening statement that there will be a statutory instrument and a debate so I ask for brief questions and answers today, please.

Mr. Nicholas Bennett: Will my right hon. Friend confirm that the Labour party, which is so concerned now about child benefit, voted against the reductions in income tax in the last two Budgets which will help the people who will not get an increase in child benefit this year? Does my right hon. Friend agree that the best way to help those on the lowest incomes is to target it, as he has done, on those who do not pay income tax?

Mr. Newton: I agree with my hon. Friend that whatever the rate of child benefit it is right to ensure that we have special measures to help less well-off families both in work and out of work. Again, I make no apology for having concentrated primarily on those groups in part of the proposals that I have outlined.

Mr. Frank Field: As the Secretary of State is a known advocate of child benefit and he has now been defeated on this issue, what advice can he offer to his friends in the House? Does he agree that it would be gesture politics of the worst order now merely to call yet again for an increase in child benefit when it has been frozen for the third year running? Should not an alternative strategy be advanced? Does the Secretary of State accept that the best way forward would be a reintroduction of child tax allowances? Does he agree that such a move would benefit practically every working family with children? At a later stage, could not that money be put back into the child benefit scheme so that in next year's negotiations on this front, the right hon. Gentleman would have many more supporters among his hon. Friends who would be in favour of that move, including the Prime Minister?

Mr. Newton: I have noted with interest not only what the hon. Gentleman has just said, but the various press articles and other comments that he has made on similar lines. Our policy remains, as is required by law, to review the rate of child benefit annually in the light of all the relevant circumstances. That is what I have done and, in the light of all the relevant circumstances, I have come to the conclusions that I have outlined.

Sir Ian Gilmour: While I congratulate my right hon. Friend on his many welcome announcements this afternoon, does he agree that as this is the third year running that the Government have made the mean and wrong-headed decision to freeze child benefit that can only signify that it is the firm and considered—if unaccountable—view of the Government that at all levels of income couples with children have no greater expenses than couples without them or single people?

Mr. Newton: Clearly, the existence of child benefit is at variance with that proposition. As I told the hon. Member for Birkenhead (Mr. Field) just now, we look each year at all the circumstances and in particular at the needs of those who will not be helped by child benefit. This year, as on earlier occasions, we have come to the conclusion that there are better ways of spending the money involved.

Mr. Archy Kirkwood: But surely the Secretary of State recognises that there is no credibility left in the Government adhering to that view. For three years now Secretaries of State have told us that they are considering the circumstances each year individually and on their merits, but that is now a complete


fiction. Would it not be more honest to say that the Government have decided to let child benefit wither on the vine and to allow people to take appropiate steps accordingly?
Does the right hon. Gentleman agree that he has been guilty of sleight of hand this afternoon? Although many of the new changes involving increased expenditure are welcome, they are merely the recycled savings from the freezing of child benefit.

Mr. Newton: We have decided not to uprate child benefit and to use that money and, taking account of the increase in pensioner premiums and the abolition of the earnings rule, provide significantly greater sums on improving the position of pensioners, especially that of less well-off pensioners and of less well-off families. Above all, in the light of the OPCS surveys, we have used the money to improve the position of the long-term sick and disabled and their carers.

Mr. Nicholas Winterton: I associate myself with the views of the hon. Member for Birkenhead (Mr. Field), but may I also express my disappointment as a member of the Select Committee on Social Services that the Government have not decided to uprate child benefit? It is the most efficient way of getting money directly to families with children.
Nevertheless, I believe that my right hon. Friend has made an exciting announcement about the uprating of benefit, and I think that the whole House should look in detail at what he has said so that we may have a constructive debate when the regulations are laid.

Mr. Newton: I am grateful to my hon. Friend and I am well aware that he and many others—not only the hon. Member for Birkenhead (Mr. Field)—will be disappointed that there is to be no increase in child benefit. I can only tell him and others who may feel the same way that they would also have been extremely disappointed had I not been able to do some of the many things—some 20 in all—for the groups that I have mentioned. In the real world it is sometimes necessary to make choices.

Mr. Jack Ashley: I welcome the premium for carers and the extension of the mobility allowance to deaf-blind people, although I regret the failure to extend it to mentally handicapped people. Is the Minister aware that these increases are miserly and lacking in all generosity? The fact that they are made at the expense of child benefit is disgraceful.
Does the right hon. Gentleman recognise that some disabled people need child benefit as well, so they are paying for the increase in the disability allowances by losing child benefit? Where is the justice in that?

Mr. Newton: In view of the right hon. Gentleman's long track record of pressing the case for disabled people with such vigour and in such a well-informed way, I would have hoped for a slightly less grudging response to a number of changes for which he has pressed for a long time. What I have announced today adds up in a full year to about £100 million extra for many disabled families and their children and carers; to describe that as miserly is less generous than I would have hoped for from the right hon. Gentleman.

Sir George Young: The whole House should welcome unequivocally the additional measures that my right hon. Friend has announced today over and

above the statutory uprating and bringing extra help to many groups who certainly need it. But was it not clear from my right hon. Friend's statement that these improvements are largely to be funded by freezing child benefit, provision for an increase in which was already in his Department's public expenditure programme? Where is the equity in funding these welcome improvements by placing an extra burden on families who happen to have children rather than funding them though taxpayers generally?

Mr. Newton: I fear that I have to repeat to my hon. Friend what I have said to a number of others already. When considering the overall position this year, I had to decide whether the right way to use a substantial sum of money was to increase child benefit and to give relatively modest amounts to a large number of people, many of whom have substantial incomes which have been rising rapidly, or whether to put it into the hands of groups who have not benefited in the same way and whose needs have been acknowledged by right hon. and hon. Members on both sides of the House. I decided to do the latter, and I shall not apologise to the House for that.

Rev. Martin Smyth: I welcome the general statement, but will the Minister enlighten us about when the immediate grants will be paid? As I heard and read the statement, it seemed that the next uprating is likely to be six months to a year hence. Is it not possible for some of these payments to be made with greater speed? Secondly, in relation to child benefit, the Minister referred to the fact that male earnings have gone up, but will he recognise that citizens advice bureaux and others have said that what really matters are payments direct to the woman, not male earnings. As a male, I know that many men keep their wage packets and payments to their wives separate.

Mr. Newton: Of course, family credit is also normally payable to the mother for precisely those reasons, so I do not think that the hon. Gentleman's point takes us that far. It will be difficult—probably impossible—to bring any of these changes forward from the uprating date next April, except for the increase in the independent living fund, in regard to which I have made it clear that an immediate increase is being made. In one or two cases, changes may have to be later because of the need to pass legislation.

Dame Elaine Kellett-Bowman: I had intended to take my right hon. Friend to task because he is not indexing child benefit, because there is a large number of non-earning women whose husbands do not give them an allowance of any sort, shape or kind. However, in view of the immense generosity of his proposals for people in residential homes, for carers, on whom so many elderly people rely, and for disabled people in general, I shall refrain from criticising him at this time.

Mr. Newton: I suppose that I should be grateful to my hon. Friend, and I am.

Dr. David Owen: Is it not a shabby way to help the disabled, who greatly need help, to take away allowances from children and from families with children? Is universal child benefit not a badge of citizenship in a country which professes to proclaim the


doctrine of one nation? Why does the Minister not tax the second earner in a family on child benefit and get some selectivity in that way?

Mr. Newton: I seem to be getting a number of suggestions which I shall obviously note. Choices have to be made when deciding how to use public money, and I think that we have made the right choice on this occasion.

Mr. David Nicholson: My right hon. Friend and the Minister with responsibility for the disabled are to be congratulated on their skill in targeting this package at a time of financial stringency. Did my right hon. Friend hear the various murmurs of appreciation, not only from Conservative Members but from Opposition Members, as various long-standing injustices were remedied? Is he aware that the proposal on carers and on the independent living fund, both of which featured in the debate last week, are particularly welcome? Will he do everything that he can to increase uptake of family credit, which is an excellent benefit and can he say how much spending on family credit has increased in comparison to family income supplement?

Mr. Newton: Very roughly, the amount being spent on family credit is about twice as much as that on family income supplement. As I have said, as that goes to about 50 per cent. more families, it means that the average amounts being paid are substantially greater than under family income supplement. I noted and was grateful for the murmurs of approval from all parts of the House for what I announced, especially in relation to the disabled. We certainly hope in due course to build further on that.

Ms. Marjorie Mowlam: The Secretary of State has returned to the position of two years ago for single parents of allowing them to earn up to £25 before it affects their benefit. Will he clarify whether he intends to return to the other piece of legislation of two years ago when the £25 was net of child care costs? Unless that is the case, his moves today will have no meaningful effect for single parents.

Mr. Newton: I have no plans for going back down the path of introducing specific arrangements in relation to specific costs. The increase in this earnings disregard in housing benefit for lone parents from £15 to £25 will help significantly with the problems of lone parents generally and especially those who wish to work.

Miss Emma Nicholson: Is not my right hon. Friend aware that withering on the vine produces the most concentrated and sweetest wine? He has offered the House a most carefully constructed libation that will do more to help the really poor than the thin gruel spread so forcibly throughout the population by the Opposition. I also welcome the allowance to be paid to parents of severely disabled children under two where medical advances now mean that such children can be cared for at home. That is an example of sensitive thinking which I warmly welcome. Will he continue to look most carefully at the delivery system for family credit?
I welcome the fact that the advertising campaign has resulted in a greater take-up. I look forward to far greater

efforts being made in advertising and other campaigns aimed at the population so that this excellent benefit will receive the take-up that it deserves.

Mr. Newton: Yes, I will continue to look very hard at ways of improving still further the effectiveness of family credit. This has been a fairly intractable problem under both family credit and family income supplement, but I am encouraged by the progress that we made in the early part of the year and which I outlined in my statement. I hope that we can build on that, especially in relation to lone parents. I obviously agree with the general drift of what my hon. Friend said about child benefit. Because of the medical advances about which she spoke and other matters, we have reviewed and changed the position about attendance allowance for the under-twos.

Mr. John Battle: Although I welcome the overdue extension of mobility allowance to the deaf-blind, may I ask the Secretary of State to amplify his comments on pensions, because his answer on 17 October clearly demonstrates that every year since July 1986 the value of a pension as a proportion and percentage of average net earnings has been declining and is now lower than it was in 1978 and 1979? Further, what is his Department's estimate of the take-up level of family credit? Is it not the case that nearly 250,000 families who are entitled to family credit are not getting it because the take-up is low? What will happen is that some funds will be shifted from child benefit into family credit, but the Minister's Department will not even have budgeted for a full take-up of family credit.

Mr. Newton: What the hon. Gentleman suggests in the latter part of his question is manifestly incompatible with the strenuous efforts that we are making to improve the coverage of family credit. I have not given any figures for the percentage take-up of family credit because it is increasingly obvious from looking at the figures that we are not at all clear about the full size of the eligible population. Therefore take-up figures as such are not very meaningful. I have concentrated on what we have succeeded in doing in increasing the numbers of people in receipt of the benefit by comparison with the earlier period, because that is what seems to matter. As I said in my statement, the number went up by 40,000 to 320,000 in the middle part of this year.
On the earlier part of the hon. Gentleman's question, the apparent discrepancy between my earlier answer and what I said this afternoon is that pensioners' incomes from state social security benefits are only a small part—in some respects an increasingly small part—of pensioners' total incomes. Over the period to which I referred—from 1979 to 1986; the latest data available—income from social security benefits rose by 19 per cent. in real terms but income from occupational pensions rose by 56 per cent. in real terms and income from savings rose by nearly 64 per cent. in real terms. That explains the discrepancy. Whereas income from savings rose by 64 per cent. or 64 p in the pound under this Government in that period, under the previous Labour Government, the figure fell by 16 p in the pound.

Mr. John Maples: Many of us welcome my right hon. Friend's decision not to uprate child benefit as we regard it as wrong to pay universal flat rate benefits regardless of people's means. They are a


recipe for high taxation and it is no business of the state to have one of its agencies taking money out of the pockets of husbands so that another agency can put it back into the pockets of wives. Will my right hon. Friend use every opportunity to explain something to which he alluded in his statement but which is widely misunderstood, which is that an uprating of child benefit would have been of no benefit to children of the poorest 25 per cent. of families?

Mr. Newton: As I know my hon. Friend understands, as child benefit is taken into account in setting the rates of income support and so on, an increase in child benefit reduces the amount of income support that would otherwise be paid. Conversely, if child benefit does not increase, as it is not increasing in my proposals for this year, the effect of that is fully offset for income support families by the increases that take place in their income support for their children and themselves.

Mrs. Margaret Ewing: Will the Secretary of State accept that, despite his many and loud protestations today, his decision to freeze child benefit yet again will be regarded as a niggardly move by millions of women throughout the country as it is the one benefit that has an uptake rate of 98 per cent. and is paid directly to the mother? If it is his intention to kill the benefit through death by gradualism, has the right hon. Gentleman made an estimate of when family credit will have reached the same level of take-up? When he brings forward his proposals on mobility allowance and attendance allowance, will he also be looking at the procedures for dealing with such claims, because it seems as if the authorities believe that they should pay as few as possible of those allowances? Where an appeal is made people are subjected to long, difficult and sometimes humiliating procedures in order to obtain payment of the benefits.

Mr. Newton: The answer to the hon. Lady's last question is yes. It is something that I am conscious of and if we could find ways of improving the medical adjudication procedures nobody would be more pleased than I. However, I do not want to pretend that that will be a simple or quick task. The hon. Lady may be right to think that some people—indeed there has been some evidence in the House today—will regard my decision not to uprate child benefit as niggardly. However, it will not be seen as niggardly by, among others, those women who are caring for disabled people, severely disabled babies and others, as they will be receiving substantial benefit increases.

Mr. Robin Squire: My right hon. Friend is a humane and intelligent man and that is reflected in the range of welcome initiatives in his statement. However, he knows that as a result of his statement, several hundred thousand families in difficult circumstances, on either side of the level of salary qualifying for family credit, will receive nothing for the third year in a row. Knowing that, and hearing the suggestions from both sides of the House on the necessity for change, will he accept the need to change the system if we cannot uprate benefits?

Mr. Newton: Again, I note what my hon. Friend has said and the comments he is reported to have made in the newspapers this morning. I am grateful that he has acknowledged the scale and importance of what I have been able to do as a result of the decision not to increase child benefit this year.

Mr. Andrew F. Bennett: Does the Secretary of State agree that his early reputation in the House was built on the championing of child benefit as a universal benefit? Does he not now find it humiliating to have to trample over his principles?

Mr. Newton: No, I do not. I have never made any secret of the importance that I attach to helping families with children, but it does not follow that that can be given, at any particular point in time, priority over a whole range of other needs that I have also advanced in the House over the years, including those of disabled people. My main feeling is one of pride at having been able to make so many improvements for that latter group.

Mrs. Elizabeth Peacock: While I welcome greatly what my right hon. Friend has told the House and appreciate all the extra money that he has announced—we all recognise and welcome that the sum is £143 million per day for benefit—I am greatly disappointed that he has not found it possible to uprate child benefit. I appreciate that it is a universal benefit, but it is paid directly to the mother, and that is an important aspect. During the next six months, will my right hon. Friend look carefully at the take-up of family credit, to see whether he can raise that figure to as near as that for child benefit as possible? I shall reserve my judgment about opposing him until I see how he gets on.

Mr. Newton: I take some comfort at least from the last part of what my hon. Friend said. I assure her, as I have assured the House several times, that everything possible will be done to increase the number of people who take up family credit. The improvements that I have announced this afternoon will assist in that process.

Ms. Dawn Primarolo: Why has the Secretary of State ignored the report of the Social Security Advisory Committee, which said that if child benefit was not raised, the Government's efforts to encourage single mothers back into the paid labour market would not succeed, and that the freezing of the benefit at the 1987 level would increase women's dependency on means-tested benefits and continue to trap them within the poverty limit?

Mr. Newton: I have not ignored anything, on this or any other front, that the Social Security Advisory Committee has said. I simply take a different judgment, certainly at the moment, about the right way to achieve the objective to which it also attaches importance.

Mr. Robert G. Hughes: Does my right hon. Friend accept that many Conservative Members find it offensive that people on the salaries of Members of Parliament and other similar salaries are still receiving child benefit, and that we would prefer to see that money used to help people who are less well off? People who are not sharing their income fully with their wives and children should be thoroughly ashamed of themselves. Most people will welcome my right hon. Friend's statement that the people most in need will be helped most.

Mr. Newton: My hon. Friend has at least clearly shown that there is more than one view. I have sought to strike a balance that best suits the needs of those whom we most want to help at his time.

Mr. Harry Ewing: I should declare my position as one of the few hon. Members who gives all his earnings to his wife. What she does not get, my daughter gets.
Does the right hon. Gentleman appreciate that this is the third consecutive year that child benefit has not been increased? If, in 1991, in the run-in to a general election, he thinks that he can use child benefit for an election bribe, he will find that millions of mothers simply will not forgive the Government for the treatment that they have had over child benefit in the past three years.
On a completely different issue, as some of the changes that the Secretary of State has introduced arise from the introduction of the social security changes in April 1988, will he look at another anomaly introduced by those changes? The Government increased the age limit for qualification for a widow's pension from 40 to 45. Many widows who receive widowed mother's allowance will go off that allowance before they are aged 45. Therefore, they will go from the widowed mother's allowance one day to nothing the following day. Will the Secretary of State look at this vexed question?

Mr. Newton: The hon. Gentleman will know that we have acted already to deal with one aspect of the changes in widows' pensions which was widely regarded as anomalous. I shall examine with care what he has said, but I cannot give him any undertaking. As for child benefit, I have no plans to do anything other than what I have faithfully done this year, which is to review the matter in the light of the circumstances and the other things that I wish to do. That is what I shall continue to do.

Several Hon. Members: rose——

Mr. Speaker: Order. I must have regard to subsequent business. I shall endeavour to call hon. Members who have been rising in their places, but I ask for brief questions and not repetition of questions which have already been asked and answered.

Mrs. Maureen Hicks: I welcome the generous benefits that have been outlined, but I have to say to my right hon. Friend that I think that there is an inconsistency and a principle at stake in excluding yet again an uprating of child benefit. I remained silent during the previous two occasions on which we discussed the subject, but I have reached the point where I am conscious of those who do not apply for family credit, despite our wonderful efforts to encourage take-up, and of constituents who are not eligible for family credit. I hope that all the comments that my right hon. Friend has heard this afternoon will demonstrate clearly to him that there is a need to say honestly and openly that there is a clear-sighted policy for the future. The Government have always been recognised as being clear sighted, but we are now in danger of having muddle. We have a universal benefit that has not been upgraded and at the same time we have family credit. All that we are saying is that we look to my right hon. Friend in future to offer a clear policy.

Mr. Newton: I respect what hon. Friend has said and the reasons why she said it. I merely say that I think that it would be accepted on both sides of the House that under a Government of any colour it would be virtually inconceivable that child benefit could be set at levels that would give family credit families the same amount that they get from family credit. Wherever the line is drawn,

there will be a need, in my judgment, for a benefit of that sort. I think that it is right to concentrate on making it as effective as we can.

Mr. Nigel Griffiths: Does the Secretary of State not realise that for the 10th year running the Government have failed to link old-age pensions to rising levels of incomes? Next year the Government will save about £5,000 million from failing to uprate the old-age pension, and that is enough to cover the package that has been announced today, the top tax cuts for the rich and this month's trade deficit, all on the backs of Britain's pensioners.

Mr. Newton: Over the 10 years during which the Government have presided, the range of our policies as a whole have increased pensioners' average net incomes far faster than under the previous Government. In recent months—indeed, during this very month and in parts of the package that I have announced—we have given additional help on a substantial scale to those who have not yet benefited from occupational pension schemes, for example.

Mr. Barry Field: In view of the demographic slump, my right hon. Friend's announcement on helping lone parents back into work will be widely welcomed. Can he tell me when he will be able to announce a decision on a local increment for income support for families, with young children, that have a metered water supply?

Mr. Newton: I cannot give my hon. Friend an off-the-cuff answer on the second part of his question. I am grateful for his introductory comment.

Mr. Max Madden: May I urge the Secretary of State to launch an urgent investigation into the difficulties of elderly people and their relatives who are finding great difficulty in paying the difference between DSS benefit and private home fees? Will he instruct his Department to collect information about elderly people who are being evicted from private homes because they cannot afford to pay the fees? In that context, will he persuade councils, such as Bradford council, not to close council homes, whose places will be needed desperately for elderly people who cannot afford the fees of private homes or are evicted from private homes because they cannot pay the fees?

Mr. Newton: The hon. Gentleman will be aware that payments from social security in that respect have risen from only about £10 million in 1979 to more than £1 billion this year, and I have announced further increases today. The hon. Gentleman would acknowledge that payments have never been set at levels that cover all the costs in all the homes. However, they do cover the majority of homes, and I think that that cover will be improved by what I have announced today. That is certainly the position that I expect next year.
We all know that the system has not proved to be an entirely satisfactory way of providing help, which is why, following the report of Sir Roy Griffiths on community care, the Government have changed to a different way of dealing with those needs. Meanwhile, I repeat that what I announced this afternoon will give significant further help to many tens, indeed hundreds, of thousands of elderly people.

Mr. Peter Thurnham: I congratulate my right hon. Friend on a welcome and thoughtful package. I am glad that he did not delay bringing in the planned £100 million package for the disabled. He has done a fair job in his dealings with the Treasury, but we shall be looking for further benefits for the disabled when he introduces his White Paper.
Will my right hon. Friend remind Opposition Members that universal child benefit accounts for about half of the total family package? Does he feel that he now has the balance right between targeted and universal benefits?

Mr. Newton: In an area where I appreciate so many of the difficulties and the needs, I should always be reluctant to claim that we have everything absolutely right. However, as a result of what I have said this afternoon the balance of the social security system will be improved, and not least in relation to the disabled, in whom my hon. Friend rightly takes such an interest. I hope that we have paved the way for further improvements.

Mr. Jeremy Corbyn: Will the Secretary of State take this opportunity to congratulate my hon. Friends the Members for Preston (Mrs. Wise) and for Coventry, South-East (Mr. Nellist) and all those who campaigned for attendance allowance for the parents of disabled children under the age of two? Is he aware that his statement will be profoundly disagreeable to millions of pensioners and that he must therefore return to the 1980 link between the old-age pension and earnings? That would give pensioners an increase of at least £8 more per week than he has announced today. Does he realise that they bitterly resent the way in which they have been robbed by this Government during the past decade?

Mr. Newton: Obviously, I reject the suggestion in the latter part of the hon. Gentleman's question. I beg leave to doubt whether pensioners generally would feel that way about proposals that steer additional help to so many of them, especially when taken alongside the increases this month in the pensioner premiums for the over-75s and for disabled pensioners.

Mr. Andrew MacKay: Is my right hon. Friend aware that as most people rightly believe that benefits should be targeted towards those most in need, they will widely welcome his statement today? Is he further aware that they will think him right not to increase child benefit further, but instead to use the money on more urgent priorities?

Mr. Newton: I am grateful to my hon. Friend for what he said.

Mr. John McAllion: Last week, the Home Secretary boasted that police pay had increased by 50 per cent. above the rate of inflation since 1979. This afternoon, the Secretary of State has yet again shackled pensioners to increases of no more than the rate of inflation and he has frozen child benefit for the third year running. Is he saying that in the real world, when choices have to be made, the Government choose to boost police pay at the expense of pensioners and mothers with families?

Mr. Newton: The hon. Gentleman might care to reflect on the fact that under this Government, the real value of total expenditure on the long-term sick and disabled has

risen not by 50 per cent., but has doubled. With the introduction of family credit alone, we have pretty well doubled the amount spent on low-income families in work.

Mr. Kevin Barron: Will the Minister answer the question asked earlier by my right hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley) about the widening of the likely recipients of mobility allowance to include those with the disabilities of hearing and sight loss? Will he take that even further and bring in mental handicap, too? I am sure that he is aware that many people feel that the system is grossly unfair and that an extension that does not include mental handicap is only half a job.

Mr. Newton: I am aware of the arguments that took place both in this place and another place during the passage of the social security legislation earlier this year. When I considered the matters I concluded that there was a clear-cut and relatively straightforward way of helping the deaf-blind. The other problem to which the hon. Gentleman referred is somewhat more complicated, but we shall consider it in the course of the review to which I referred.

Mr. John Fraser: Does the Secretary of State recognise that most single working parents are women, and therefore not in receipt of average male earnings, and that in inner-city areas many single working parents face massive poll tax payments next year, massive rises in housing costs and high child care costs? The effect of freezing child benefit is simply yet another disincentive to women to stay at work or return to it.

Mr. Newton: Many single lone parents such as those to which the hon. Gentleman referred receive income support or family credit. As I made clear in my statement, the measures announced this afternoon will be helpful to many lone parents. Part of the aim of the family credit further take-up campaign is to ensure that it becomes even more helpful to many lone parents.

Mr. Brian Wilson: Does the Secretary of State accept that on top of the poll tax and the cruel removal of all benefit from 16 and 17-year-olds, freezing child benefit confirms the Tories' growing reputation as the anti-family party? At the other end of the age scale is a matter of particular concern in my constituency about which I seek general elucidation. The Secretary of State gave the impression of generosity when he announced a £10 increase in income support for elderly people in residential homes. Will he confirm that the increase will be only £10—less than the rate of inflation? Does he accept that that will increase pressure on the proprietors of such homes who at present maintain people at a rate that does not cover costs and will lead to people being removed from homes when they have nowhere else to go? Does he accept that the Government's parsimonious policies are simply building up problems for the future?

Mr. Newton: I have already made extensive comments on that matter in response to an earlier question. The percentage increase represented by the £10 increase varies because of the wide variation in the existing limits. In the case of residential care homes for the elderly, which have


given rise to special anxiety in recent months, it represents an increase from £140 to £150, which cannot be dismissed as the hon. Gentleman sought to do.

Mr. Speaker: Mr. Tony Banks.

Mr. Tony Banks: Thank you, Mr. Speaker. You are a hard man, Sir.
It is perverse of the Secretary of State to claim as a virtue the additional money being laid out by his Department this year given that his Government's policies have forced so many people into poverty in the past 10 years. Is it true that unprocessed social fund applications at departmental offices are carried over into the next year's budget rather than being taken out of the budget for the year in which the application was made, even if it shows a surplus? If so, it is grotesquely unfair and the Secretary of State must do something about it.

Mr. Newton: The mechanism of the social fund involves having regard to the priority of a particular range of claims. In the next few months I shall consider how best we can set the allocations and divisions between local offices and between different purposes of the social fund in the light of our continued monitoring.

Mr. Robin Cook: May I press the Secretary of State to say something about the cases of income support and transitional protection about which I asked him? He will be aware that not only have those people had their benefit frozen for three years, but some face a further freeze of another three or four years. Some of the most harrowing letters that I receive—and, I suspect, that he must receive—are from those caught in that trap. Whatever one's view about freezing benefits—and vigorous views have been expressed by hon. Members on both sides—there cannot be a case for freezing a means-tested benefit which is supposed to reflect costs. Will the Secretary of State ascertain whether such people could qualify for an uprating of their benefit?

Mr. Newton: It is important that we should all recognise that just under 90 per cent. of those on income support will receive an increase in this uprating. Of the remaining 10 or 12 per cent., about half will receive a partial uprating. The need for transitional protection arose from our wish to protect people during what we thought was, overall, a sensible change in the social security system. People were inescapably involved in moving from the old system to one that, as my statement has shown, is better able to target money quickly and effectively on those in need. The hon. Gentleman also knows that steps have been taken to uprate transitional protection in some of the most difficult cases—those who previously had large amounts of domestic assistance or payments in respect of respite care.

Children Bill (Proceedings)

Mr. Tim Devlin: On a point of order, Mr. Speaker. Have you received a report of the events last night, which meant that consideration of the Children Bill was not completed because of the activities of hon. Members from mining areas, as Opposition Front-Bench spokesmen have admitted? It is an important measure which has been supported by both sides of the Committee. It represents thousands of hours of work by responsible children's organisations. It now appears that it will be lost because of the activities of certain Opposition Members.

Several Hon. Members: rose——

Mr. Speaker: Order. Perhaps it would be helpful if I were to deal with this matter straight away.

Mr. Dennis Skinner: Further to that point of order, Mr. Speaker.

Mr. Speaker: Order. If I clear up the matter, the hon. Member may not need to raise his point of order.

Several Hon. Members: rose——

Mr. Speaker: I understand that there was some delay last night in the completion of the Children Bill. I am not aware and it has not yet been reported to me that anything out of order took place.

Mr. Skinner: It is unfortunate that the hon. Member for Stockton, South (Mr. Devlin) did not stay to hear the debate last night. If he had, he would have heard an honest-to-goodness debate about the Government forcing pre-school playgroups to pay for licensing and inspection. Several Tory, Labour and Liberal Members—no mining Member of Parliament whatever—took part in the debate. There were 400 Government amendments. The Government's troops, including the hon. Gentleman, went home to bed with the result that the Children Bill was lost because the Government spokesmen pulled up the stumps.

Mr. Speaker: Order.

Mr. Skinner: This is important. The hon. Gentleman has made an allegation.

Mr. Speaker: Order. I have read about the proceedings, so I do not need to be told about them. As far as I am aware, nothing out of order took place.

Mr. Roger Sims: On a point of order, Mr. Speaker. Can you confirm, because it is not clearly understood outside the House, that any measure before the House must pass through all its stages, with amendments passed by both Houses, before it becomes law and that any Bill that does not do so by the time that Parliament prorogues falls? Are you aware that, as a result of what happened last night, there is a real danger that this Bill could suffer that fate? The Bill has had all-party support and its implementation is anxiously awaited by many caring organisations. Do you agree that if that were to happen it would not only be deplorable but would inflict great damage on the reputation of Parliament, which I know that you are anxious to guard?

Several Hon. Members: On a point of order, Mr. Speaker.

Mr. Speaker: I will take all the points of order together.

Mr. Alan Williams: On a point of order, Mr. Speaker. Unlike anyone else, you, Sir, have the privilege of reading what happened. The way in which Hansard is published means that anyone who hears this exchange will not have read what happened. It is important that we are allowed to put the record straight. It is not good enough for part-time Tory Members—[Interruption]—who are so dedicated to the legislation that they sneak off home as soon as the three-liner is concluded to attack the Opposition when the Government's incompetence in drafting their legislation led to 400 amendments which had to be dealt with in 12 hours, or at the rate of 40 per hour, or one every two minutes. As we stayed to discuss them, we do not accept the hon. Gentleman's criticism.

Several Hon. Members: On a point of order, Mr. Speaker.

Mr. Speaker: Order. These are not matters of order, although they may be matters of disagreement across the House.[Interruption.] Order. I have already said that what the right hon. Member for Swansea, West (Mr. Williams) has said is absolutely right, in procedural terms. What happened last night was in order, although it may have been unfortunate.

Mr. Nicholas Bennett: I was here at 1.50 am, and raised the matter with Mr. Deputy Speaker at the time. What happened last night was that a Division was forced by the hon. Members for Bolsover (Mr. Skinner) and for Doncaster, North (Mr. Welsh), in which no hon. Member voted with the Noes. It was clear that the intention was to force Divisions on numerous later amendments on which there is no disagreement, to keep the House here throughout today, if necessary, and lose today's business.
The hon. Member for Monk lands, West (Mr. Clarke) said last night:
when other reasonable hon. Members representing mining areas feel it necessary to demonstrate as they have done …".
"As they have done": the Opposition Front-Bench spokeman admitted that that was what was going on. The Opposition, having reached an agreement with the Government on a Bill that is not contentious—for there is general agreement that child abuse must be dealt with as quickly as possible—welshed on that agreement. They cannot control a small minority of mavericks. Is it not time that the House ruled on whether Divisions should take place when there is no disagreement and no hon. Member votes with the Noes, merely to obstruct a Bill for other purposes?

Mr. Robert Key: On a point of order, Mr. Speaker. You will know how rare it is for a Back Bencher to persuade the Government to accept an amendment.

After many hours of debate with hon. Members on both sides of the House, I was able to do so, and the amendment was passed unopposed on Report. Now we see that it is about to be lost. In such circumstances, is it in order for hon. Members on both sides of the House to approach the Leader of the House to seek a guillotine on the business as soon as possible?

Mr. Frank Haynes: You know, Mr. Speaker, they are a mardy lot over there—and they are being really deceitful this afternoon. [Interruption.]

Mr. Speaker: Order. As I think the hon. Gentleman knows, that word is not parliamentary. Will he please withdraw it?

Mr. Haynes: In your interests and no one else's, Mr. Speaker, I will withdraw it.
We could have got that Bill last night. Both sides of the House wanted it, but the Government Chief Whip came to the Chair and said, "I am going to move the closure," so the Government did it. They all wanted to go to bed, that was the trouble.

The Lord President of the Council and Leader of the House of Commons (Sir Geoffrey Howe): Further to that point of order, Mr. Speaker. One feature is, I think, central to the whole discussion. The Children Bill commands widespread support throughout the House. It is a good Bill, widely commended, and last night—I was here and the shadow Leader of the House was not—the Opposition Front-Bench spokesman left us in no doubt about his anxiety to see it passed. [Interruption.]

Mr. Speaker: Order.

Sir Geoffrey Howe: As is not unusual, the usual channels had made arrangements for the Bill to be discussed, and the expectation—settled and firm on both sides—was that it would be finished by a reasonable hour. That progress, however, was not made. As one of my hon. Friends has pointed out, a Division took place in which no Opposition Member voted, and the Opposition Front-Bench spokesman expressed his regret that progress had been impeded for the reasons already given. In those circumstances, there was no prospect of progress being made along the lines previously foreshadowed. My right hon. and learned Friend the Chief Whip therefore prudently said, "Let us draw stumps tonight and see whether we can make a better attempt at it on a future occasion."
The proof of the pudding may be, to a significant extent, in the eating of today's business. Let us see whether we can make sensible headway with that, as foreshadowed through the usual channels. Then we may be able to return to the other matter coolly, and fulfil what the people of this country expect—the enactment of the Children Bill, containing many Government amendments in response to the debate that has taken place.

Fisheries Legislation (Repeal)

Mr. Teddy Taylor: On a point of order, Mr. Speaker. As a means of helping today's business and safeguarding the rights of Parliament—about which I am sure the Leader of the House is very concerned—may I ask you, Sir, how it can possibly be in order for the House to consider tonight the Merchant Shipping Act 1988 (Amendment) Order 1989, which repeals, on the interim advice of the European Court, sections of a law passed by Parliament only last year which was stated by the Minister introducing the Bill to be essential if British fishing quotas were to be preserved for British fishermen?
Let me make two points. The order relates solely to the nationality provisions of vessel ownership and qualified persons. Is that not sub judice? There are two other cases involving both nationality and company domicile and residence, on which the United Kingdom Government are required to provide their final submissions by 9 and 15 November. Those cases are Nos. 221 and 213 of 1989, and are known as the Crown v. Factor Tame Ltd. and Others, initiated by Spanish fishermen. If we lost that case, another order revoking another section will be required, taking up more parliamentary time, and if we win the order itself will be revoked.
The second argument is whether it might be irrelevant and time-wasting to have a debate at all tonight. In case No. 213—before the European Court—the House of Lords, in its judicial capacity, is seeking the advice of the European Court on whether British courts, and not the British Parliament, have the right to suspend or revoke laws passed by Parliament at the request of the European Court. Surely it is silly to waste our time at a late hour, when in a short time the divisional courts in Britain may have the power to act in that legislative capacity and do the job for us. As the final date for submissions of evidence is 9 November, we have not long to wait.
I hope that you will agree, Mr. Speaker, that the constitutional issues and rights of Parliament that are involved are important and fundamental, and that, in the circumstances, to discuss the order tonight would make nonsense of parliamentary procedures.
The draft order states for all to see that copies of the judgment can be obtained from the Treasury Solicitor, and not from the House of Commons. It seems wrong to me that Members of Parliament are apparently denied even the ready availability of papers that they require to do their work. I hope that you agree, Mr. Speaker, that this is an important issue and one that matters to Parliament, whatever we are doing.

Mr. Speaker: The hon. Gentleman kindly gave me notice of his point of order, so I have been able to look into it with great care, and I have some sympathy with what he has said.
As to whether tonight's debate would be affected by the sub judice rule, I have to tell the hon. Gentleman that that rule does not apply during the consideration of delegated legislation, or to proceedings of the European Court. As to the hon. Gentleman's other points about the provisional nature of what the House is being asked to do tonight, that is really a matter for debate, not a point of order for me.
As to the availability of copies of the interim judgment of the court, copies of the judgment are available to the general public from the Treasury Solicitor, but I am informed that a copy was deposited in the House together

with the draft order, and that copies for the use of Members are now available in the Vote Office. As to whether the debate proceeds, that is not a matter for me, but I am sure that, in the light of what the Leader of the House has just said, he will consider it.

Mr. Alan Williams: Further to the point of order, Mr. Speaker. I thank you for the helpful ruling that you have just given, and I think we are very encouraged by the fact that you feel that there is ground for sympathy with the point of view put by the hon. Member for Southend, East (Mr. Taylor).
As the Leader of the House is present, may I make a suggestion in good will, as one who is not directly involved in the issue? I have consulted my hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman), who will be dealing with it for the Opposition. He assures me that he has met fishing interests from England, Scotland and Wales, all of whom are affected by the issue.
In addition, other hon. Members are as deeply concerned as the hon. Member for Southend, East about the constitutional aspects of the problem. Yet we are to have a debate of only an hour and a half. There is no way in which either side of the issue can be justifiably and fairly aired in an hour and a half. Therefore, I appeal to the Leader of the House to withdraw it this evening and bring it back, even if it has to be late at night. I am sure that hon. Members who are involved in constitutional issues will be willing to stay and debate it if a proper debate could be arranged.

Mr. Speaker: Allow me to deal with this matter. It is not a matter of order for me, as the deputy shadow Leader of the House——

Mr. Richard Shepherd: rose——

Mr. Speaker: Order. It is not a matter of order for me——

Mr. Shepherd: There is a point of order.

Mr. Speaker: Order. No, please. I am on my feet. The deputy shadow Leader of the House has put a suggestion to the Leader of the House. I am sure that these matters can be discussed through the usual channels, but they are not a matter of order for the Chair.

Mr. Shepherd: There is a point of order that I think is for us and for you, Sir, as our representative in the Chair.

Mr. Speaker: Of course I always take these points of order, but the hon. Gentleman must not jump up when the Speaker is on his feet. If he has a genuine point of order, will he please put it now?

Mr. Shepherd: There is a genuine constitutional worry here. My understanding and concern—this is why I seek your guidance—is that the supremacy of Parliament meant that the most recent legislation gainsays legislation made prior to it. In this instance, the Merchant Shipping Act was passed last year, the European Communities Act was passed in the 1970s and the Single European Act was passed some years ago. By what authority, therefore, is a piece of legislation that we have passed as recently as last year being questioned or countered by authorities beyond this territory, under preceding legislation that has since been gainsaid by our last legislative expression on the matter? That is my point of order.

Mr. Speaker: That, sympathetic though I am with it, is not a point of order for the Chair. These matters have to be put to Ministers who are dealing with this particular order. It is not a matter for me.

Statutory Instruments, &c.

Mr. Speaker: With the leave of the House, I will put together the two motions relating to statutory instruments.

Ordered,
That the draft Insolvency (Northern Ireland) Order 1989 be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the draft Companies (Northern Ireland) Order 1989 be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. Patnick.]

Points of Order

Mr. Gerald Howarth: On a point of order, Mr. Speaker.

Mr. Speaker: On a completely different matter, please.

Mr. Howarth: Last night, the hon. Member for Barnsley, Central (Mr. Ilsley) referred to the alleged grievances of the so-called mining group of Members of Parliament who sought to prolong the debate on the Children Bill as part of their dispute with the Chairman of Ways and Means about the Associated British Ports Bill. May I point out to you, Sir, that that group consisted of——

Mr. Speaker: Order. The hon. Gentleman is shooting himself in the foot. This is not the occasion to be pointing out matters to me. He is raising a point of order. I have already said that this is not a matter of order for the Chair. The hon. Gentleman has heard what the Leader of the House said about it. We have a very heavy day before us; let us see how we get on.

Mr. Howarth: Further to that point of order, Mr. Speaker.

Mr. Speaker: No, I am not taking it. I shall take the point of order from the hon. Member for Cambridgeshire, South-East (Mr. Paice).

Mr. James Paice: Further to that point of order, Mr. Speaker. In your earlier remarks on the happenings of last night, you specifically——

Mr. Speaker: Order. I am not pursuing that matter. We have heard what the Leader of the House said about it, and as far as I am concerned, in terms of order, nothing more arises.

Mr. Tony Marlow: On a point of order, Mr. Speaker.

Mr. Speaker: So long as it is not on the matters that we have already discussed.

Mr. Marlow: It is not directly on it, but it is related. It is to do with the Statutory Instruments Committee. The point was made by my hon. Friend the Member for Southend, East (Mr. Taylor). I understand that some of this subject was covered by a meeting of a Statutory Instruments Committee yesterday at 4 o'clock. Is the report of that Committee available or not, because if it is not available, as my right hon. and learned Friend the Leader of the House is here, he might consider, in view of what you said and what my hon. Friend said, that it would be appropriate to delay any such debate until a later date, at which time that report may be available.

Mr. Speaker: The Committee did not draw the attention of the House to the statutory instrument. As to what the hon. Gentleman said, I am sure that it will have been heard by the Leader of the House.

Emphysema Compensation

Mr. Geoffrey Lofthouse: I beg to move,
That leave be given to bring in a Bill to provide compensation to coal miners suffering from emphysema.
The House will be aware that, between 1982 and 1985, I presented four Bills seeking to make emphysema an industrial disease in coal mining. I have not presented a Bill since 1985 because of the promise of the Industrial Injuries Advisory Council to investigate the report published in May 1988. I am now presenting another Bill to make emphysema among miners an industrial disease. I do not intend to present evidence that I presented in speaking to my previous four Bills, which are well documented in the Official Report.
The latest ITAC report into bronchitis and emphysema was expected to give rise to more widely available industrial disablement benefit for certain disabled coal workers, but, rather surprisingly, it failed to do so. The report recommends no changes in the present system.
I have to say that I am not satisfied with the report. It still fails to consider emphysema as a distinctive disease. It ignores aspects which link it with the industrial disease pneumoconiosis, and continues to ignore vital evidence which shows a direct causal relationship between coal dust and emphysema.
Contrary to my o pinion and the feelings of the House, a mistake was made by the IIAC when it decided to investigate bronchitis and emphysema. Bronchitis has industrial aspects, but it is a more universal disease; nor is the research into its causes highly developed. Emphysema, by contrast, is an industrial disease and its research is sophisticated and advanced. It can be shown that emphysema can kill non-mine workers, but it is more prevalent in miners than others.
I also feel that it is a mistake to consider emphysema as separate from pneumoconiosis. In some coal workers, the emphysema element of their pneumoconiosis is mild, while in others it is severe. But pathologically, emphysema is clearly part of the pneumoconiotic process. That separation has led to many of the current difficulties, and persists in the IIAC report.
Of course, no one is saying that all coal workers with emphysema have acquired it because of their occupation, but compensation is always a question of balancing two tendencies—not compensating all those who have acquired the disease occupationally and compensating too many, including some who have acquired it non-occupationally.
At the moment with emphysema, the balance is very much on the side of not compensating enough miners. It is time to tip the balance, not to the other extreme, but to some reasonable middle ground. The suggestion of using the X-ray changes as an index of retained dust was sensible

and would have avoided going to the other extreme. The reasons given in the report for rejecting that suggestion are unconvincing.
I am also dissatisfied with the way the report treats miners who smoke. Statistical tools exist to compensate for smokers and to continue the idea that miners get emphysema because they smoke. It is naive to call for research on miners who do not smoke. I believe that that is done to avoid giving men justice. I am also informed that the analysis of the appendix to the Soutour and Hurley 1986 paper is misleading—possibly deliberately.
It has repeatedly been found that there is an excess of emphysema among coal workers. That emphysema has been shown to be related to lifetime coal dust exposure, by many authorities, most notably by Huckley et al, who concluded that the association between emphysema and coal dust is likely to be causal. No report or study has failed to find a relationship between coal workers and dust exposure. Bearing that in mind, we must ask why the Industrial Injuries Advisory Council found against miners.
Yesterday, I had the privilege, if that is the right word, of visiting the Royal Courts of Justice in the Strand. The family of a deceased Kent coal miner were suing British Coal for the death of their husband and father. I do not want to go into the details of the case, hut experts expressed different opinions about the case. One can therefore understand the difficulties experienced by the Industrial Injuries Advisory Council.
In-depth, learned research into the disease, which has never been refuted, has been completed. It shows that a miner is 10 times more likely to catch emphysema than any other industrial injury. It is not good enough to say that there is insufficient evidence. The evidence will be investigated in the future. The practice of the Industrial Injuries Advisory Council has been to investigate every 10 years. If it takes another 10 years to investigate, most of the problem will have disappeared because those unfortunate men, many of whom cannot walk or lift a cup of tea to their lips, will have died. Since I first introduced a Bill on this subject in 1988, hundreds of miners have died. They did not receive justice.
It is essential that the House recognises the problems experienced by disabled miners and supports the Bill. which will give justice and due compensation to those men in their lifetimes.

Question put and agreed to.

Bill ordered to be brought in by Mr. Geoffrey Lofthouse, Mr. Alexander Eadie, Mr. Peter Hardy, Mr. Kevin Barron, Mr. William O'Brien, Mr. Allen McKay, Mr. Frank Haynes, Mr. Dennis Skinner, Mr. David Hinchliffe, Mr. George J. Buckley, Mr. Michael Welsh and Mr. Eric Illsley.

EMPHYSEMA COMPENSATION

Mr. Geoffrey Lofthouse accordingly presented a Bill to compensate coal miners suffering from emphysema: And the same was read the First time; and ordered to be read a Second time upon Thursday 2 November and to be printed. [Bill 208.]

Orders of the Day — Companies Bill [Lords]

As amended (in the Standing Committee), considered.

Mr. Jeremy Hanley: On a point of order, Mr. Deputy Speaker. New clause 48 and amendment No. 303, which relates to it, are omitted from the selection list. The Committee of London and Scottish Bankers, the Law Society, Law Lords, the Association of British Insurers, the Confederation of British Industry and many others are concerned about the uncertain position of the law following the decision in re Charge Card Services and should like it to be clarified. New clause 48 was accepted by the Clerks after three or four draftings. An extremely important point of law arises that requires urgent discussion. I should be grateful if you, Mr. Deputy Speaker, would reconsider the selection for tomorrow.

Mr. Deputy Speaker (Mr. Harold Walker): Did I understand the hon. Gentleman to say that new clause 48 is not included in the clauses on the prefatory motion?

Mr. Hanley: I am asking you, Mr. Deputy Speaker, to reconsider the selection for tomorrow.

Mr. Deputy Speaker: As the hon. Gentleman knows, Mr. Speaker goes through the selection list with meticulous care. If the new clause and amendment to which he referred are not included, it is because they have not been selected. I shall have further inquiries made, but I think that that will be so.

Mr. Anthony Nelson: On a point of order, Mr. Deputy Speaker. May I ask for your help and guidance, in your capacity of protecting hon. Members' interests? We are about to embark on the Report stage of a Bill to which 300 amendments have been tabled. Admittedly, many of them are Opposition amendments, but the Government amendments are technical. You, Mr. Deputy Speaker, will understand that many hon. Members are faced with the serious difficulty of being unable to understand what are, in many cases, highly complex amendments at this stage of the passage of the Bill. At this late stage, officials and Ministers should not be allowed to bring before the House reams of amendments without giving the House and its Committees appropriate opportunity, and more thorough explanation, to consider them. You, Mr. Deputy Speaker, rightly protect the interests of Back Benchers. We do not have the resources or the staff to be able to investigate the proposals, many of which have major significance for the running of companies and the employment of people throughout the country. Will you, Mr. Deputy Speaker, advise us, or perhaps make a statement, about the practice that should be adopted for Bills such as this, and the extent to which any Government can bring forward so many amendments on Report?

Mr. Dennis Skinner: The hon. Member for Chichester (Mr. Nelson) makes a valid point. Before you, Mr. Deputy Speaker, took the Chair, we heard about a Bill that had 400 amendments attached to it. The hon. Member for Chichester mentioned 300 amendments being tabled

today. I have news for him: tomorrow another 500 Government amendments will be added. It appears that the Government have allowed their legislative programme to get out of control. I think that they would he well advised to drop the Bill. Some people have been talking about bringing back the Children Bill.
We understand that the Government are in a mess. We know that the Cabinet is at sixes and sevens, and that only two Cabinet Ministers wanted to hear the Chancellor of the Exchequer yesterday. The Government are in an old-fashioned mess, which was exemplified by one of their Back Benchers saying that he cannot understand the Bill that the Government have brought forward. Tomorrow will be even worse, and I believe that the Government would do beter to get rid of it altogether.

Mr. Deputy Speaker: I understand the complaints about the number of amendments and the lack of time in which adequately to debate them. These are not matters for the Chair, but doubtless what has been said will have been heard by the Minister.

Ordered,
That the Bill be considered in the following order: New Clauses relating to Part I, Clauses 1 to 4, Schedule 1, Clause 5, Schedule 2, Clause 6, Schedules 3 and 4, Clauses 7 and 8, Schedule 5, Clauses 9 to 13, Schedule 6, Clauses 14 to 18, Schedules 7 and 8, Clauses 19 to 21, Schedule 9, Clauses 22 and 23, Schedule 10, New Schedules relating to Part I, New Clauses relating to Part II, Clauses 24 to 30, Schedule 11. Clauses 31 and 32, Schedule 12, Clauses 33 to 46, Schedule 13, Clause 47, Schedule 14, Clauses 48 to 50, Schedule 15, Clauses 51 to 53, New Schedules relating to Part II, New Clauses relating to Part III, Clauses 54 to 87, New Schedules relating to Part III, New Clauses relating to Part IV, Clauses 88 to 100, Schedule 16, New Schedules relating to Part IV, New Clauses relating to Part V, Clauses 101 to 134, Schedule 17, Clause 135, Schedule 18, New Schedules relating to Part V, New Clauses relating to Part VI, Clauses 136 to 143, Schedule 19, New Schedules relating to Part VI, New Clauses relating to Part VII, Clauses 144 to 146, Schedule 20, Clauses 147 to 176, New Schedules relating to Part VII, New Clauses relating to Part VIII, Clauses 177 to 191, Schedule 21, New Schedules relating to Part VIII, New Clauses relating to Part IX, Clause 192, New Schedules relating to Part IX, Other New Clauses, Clauses 193 to 202, Other New Schedules, Schedule 22.—[Mr. Redwood.]

New Clause 1

POLITICAL GIFTS

`The following section is inserted in Part VII of the Companies Act 1985—

"234B. The directors' report shall be approved by the board of directors and signed on behalf of the board in so far as it relates to the matters specified in section 234 above and Schedule 7 to this Act, except for political purposes. Such contributions shall be reported as an annex to the directors' report such annex to be left unsigned and expressed in the form of a proposal for ordinary resolution to be approved by the company in general meeting.".'.—[Mr. Gould.]

Brought up, and read the First time.

Mr. Bryan Gould: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: With this it will be convenient to take amendment No. 1, in clause 1, page 1, line 9, at end insert
'and
(c) inserting a new provision to modify the presentation of company accounts so as to allow shareholders to consider contributions for political purposes separately from other business in general meeting.'.

Mr. Gould: May I begin by welcoming the Under-Secretary of State for Corporate Affairs to his new job and to the Bill? As the hon. Member for Chichester (Mr. Nelson) said, he has arrived at a crucial moment, because the Bill is about to break the unfortunate record established by his Department in respect of the Insolvency Act 1986 and the Financial Services Act 1986. If my hon. Friend the Member for Bolsover (Mr. Skinner) is right in predicting that hundreds of new amendments will be tabled, that unhappy record will be broken with some comfort.
In welcoming the Under-Secretary, I venture on the debate with some trepidation, because I recently read in the newspapers that this occasion is to be used by the Minister to launch a most ferocious attack on me. The reports appear in dreadfully blood-curdling terms, and I understand that I am to be portrayed as the bogy man, red in tooth and claw, and as someone with whom to frighten all right-thinking people. The only comfort that I take is that I see myself—perhaps I am mistaken—as a most unlikely bogy man, but, when I see the Minister sitting opposite me in all his meekness and mildness, I feel that he is a rather improbable hatchet man.
The only reason that I feel that degree of trepidation, however, is that, again, the self-same reports tell me that the precise weapon with which it is intended to attack me is a book which I recently published. I should be delighted if the hon. Gentleman wishes to draw attention to the book, but I assure the House that any arrangement that the hon. Gentleman may have made with my publishers to provide further publicity to the book really has nothing to do with me. I can certainly do little about it. But if he will insist on boring hon. Members with frequent references to my book, I plead not guilty to that imposition. The responsibility must be entirely that of the hon. Gentleman.
The book refers briefly to principles of limited liability in similar terms to those which I used on Second Reading. I fear that those who expect to find great revelations in the book will be sadly disappointed—if, that is, they have bothered to familiarise themselves with the proceedings on the Bill so far. However, the book does not deal with company donations. That is the subject of the new clause and, therefore, this brief debate. I assure the House that, for the moment at any rate, we are safe from the dreaded attack about to be launched by the hon. Gentleman.
The new clause is an exact replica of the amendment passed in another place when the Bill began its passage with their Lordships. It is by no means a perfect provision. Opposition Members understand that it suffers from some defects, but we believe that it was worth tabling the new clause in this precise form simply to encourage the House to take a similar view of this issue to the one that was taken by their Lordships. If the Government are willing to accept the principle that lies behind the new clause, I have no doubt that the technical problems could be corrected by an appropriate amendment or new clause when the Bill returns to the other place.
The defeat which their Lordships inflicted on the Government in the other place was rightly hailed as a great political victory—indeed it was—but it was also a great victory for common sense. The debate, vote and conclusion on that occasion demonstrated that anybody who bothered to look at the arguments—their Lordships considered the arguments very carefully—would realise the thinness of the Government's objections to what was being proposed. Accordingly, their Lordships inflicted

defeat on the Government. Predictably enough, the Government reversed that decision in Standing Committee, but, although they mustered the votes, it cannot be said that they won the arguments. The arguments remain exactly as they were when the matter was debated in the other place, and they are arguments which would convince everybody other than direct supporters of the Conservative party.

Mr. Tim Smith: It was not a Government amendment; it was my amendment, and the Committee agreed it.

Mr. Gould: I read the record of the Committee's deliberations with some care. I am slightly surprised that the hon. Member for Beaconsfield (Mr. Smith) should put his head forward on the chopping-block a second time. His ministerial colleague, the present Minister's predecessor, was quite rightly criticised for sheltering behind the hon. Member for Beaconsfield, who, admirable though he is, is not a direct spokesperson for the Government. It would have been much more appropriate for the Minister to advance that proposition rather than to use a Conservative Back-Bench Member to do the job for him.
The starting point of this debate is that the matter of donations by commercial companies to political parties is one of considerable murkiness. In making that assertion, I am encouraged and sustained by the very good evidence that considerable embarrassment is felt by all parties to such transactions. Again, the best evidence for that embarrassment is the very considerable efforts made by donors and recipients—let us be clear that the only major recipient that matters here is the Tory party—to conceal what is going on. It is persuasive evidence of that embarrassment that great subterfuges are resorted to and clandestine procedures are used. Every effort is made to conceal the truth of what goes on in that murky and somewhat grubby relationship.
That is why we saw all the revelations in The Independent earlier this year about the river companies which have only recently come to light, although they functioned for many years. We are told that all that is behind us and in the past, but, at the time, we would have been assured that there was nothing in the stories anyway. We can place little reliance on assurances that none of it happens any longer. It is considered that at least three of the river companies still exist, but it is not clear for what purpose.
There is also the use of front organisations—again not a matter which can be disputed. The Conservative party finds it convenient to set up front organisations, of which British United Industrialists is the most prominent, so that donations can be made in an indirect fashion. The reason for that is clearly admitted by some of those involved. Lord Taylor of Taylor Woodrow, prominent in BUI, admitted that BUI provides a financial conduit for business men who are frightened of their names being displayed as supporters of the Conservatives. That is a clear admission that the purpose of setting up the front organisation is to deceive and to conceal what is really happening.
There are also devices such as the use of special bank accounts, for example, the so-called free enterprise account at Drummonds bank. I wonder whether the Minister will enlighten us on whether that account still functions and, if so, for what purpose. It is not only the


donors who are shy in these matters, but the recipient—the Tory party—is extremely reticent. Tory party accounts make no mention of the substantial donations that its own members concede account for about 90 per cent. of Tory party income. There is a great deal of effort to conceal what is happening on both sides of the transaction.
There is a good reason for that embarrassment. A transaction in which commercial enterprises, usually companies, pay to a political party—in this case the Government—sums of money in circumstances in which that party in government could conceivably reward such payments with commercially important decisions favouring the donors is fraught with difficulty and will always arouse suspicion—and rightly so. Such suspicion centres on relationships which involve the award of personal honours. the award of Government contracts, the making of public appointments, and the application of ministerial permissions and sanctions of various sorts. In each case in which a payment is made and a reward is either potentially available or is actually made, the only safeguard that we have in the public interest to ensure that it is not an improper relationship is that there should be maximum openness about what is going on.
Such transactions would be bad enough if it were a matter of individuals making payments of their own money, but what is particularly worrying about company donations is that a small group of people make donations of other people's money and, presumably, expect some reward for themselves or for their company as a consequence.
A potent example of the difficulty into which secrecy and confusion can lead us is the recent sad episode of the Monopolies and Mergers Commission report on the brewing industry. When the commission made its report, the then Secretary of State proclaimed that it was an excellent report and that he was minded to implement it in full. Some of us were just a little more sceptical, not to say cynical, about that matter. We then observed a sequence of events in which great efforts were made by the major brewing firms to lobby hon. Members, Ministers and eventually, so we understand, the Prime Minister. The all too sadly predictable upshot was that the brewers had their way. The Secretary of State who had proclaimed himself so boldly at the outset was made to look foolish and craven when he abandoned the report by the Monopolies and Mergers Commission. Perhaps nothing improper happened in that relationship. However, no one observing that course of events could fail to ask whether the success which the brewers clearly expected and eventually enjoyed did not have something to do with the fact that the major brewers are bank-rollers and paymasters of the Tory party.
5.30 pm
Because suspicions necessarily and naturally arise in such cases, for some 20 years now this legislature has regarded donations to political or charitable purposes as a special category. That is why the Companies Act 1967 made special rules for that kind of donation. That is why the law remains that any donation over £200 must be reported specifically in the annual report presented to the ordinary general meeting.

Mr. Hanley: The hon. Gentleman was right to state that any donation of that sort over £200 must be stated in the directors' report. He will also know that any shareholder

can raise the subject at an annual general meeting and may vote with a simple majority whether such a payment should have been made. Surely in corporate terms democracy is available and there is also the opportunity to embarrass directors. The matter can be raised in a proper form.

Mr. Gould: The hon. Gentleman and I have sat opposite each other in many Committees dealing with these issues. He will be aware that there were earlier occasions when I had to tell him that his interventions had come a little early. If he will exercise a little patience, I will be happy to deal with his points.
The point that I was making, which is important to the sequence of the argument, is that there is good reason for the present company legislation to make special provision because the decision to give money to political or charitable purposes cannot, in the ordinary sense, be a commercial decision. If it was a commercial decision in the sense that it was expected to produce a direct and immediate commercial consequence or benefit to the company concerned, it would clearly be improper for the very reasons that we have just discussed. The donation cannot be made for buying a ministerial decision favourable to that company. It can be made only in propriety for a much wider purpose reflecting the general political judgment of the directors concerned. However, that is not what they are employed to do. Both shareholders and non-shareholders are entitled to make such a judgment, but the directors are employed to make a commercial judgment which, by definition, is excluded. That is why special rules are provided.
We must then decide whether the current arrangements which recognise the special nature of such donations are adequate to protect the shareholder and assure the public interest that nothing improper is happening. The difficulty with the situation described by the hon. Member for Richmond and Barnes (Mr. Hanley) is that of course it is possible for a shareholder attending the ordinary general meeting to comment adversely on what has already happened. However, his only sanction is to vote against the whole report and vote it down. For the reasons that were explained admirably in another place when their Lordships discussed the issue, that is a highly unlikely course of action because it is well known that if that happened a great blow would be dealt to the company's commercial management with a consequent loss of confidence. That is why the sledgehammer provided by the current provisions cannot possibly be an effective weapon in the hands of disgruntled shareholders who want simply to express their opposition to this particular use of the company's resources.
However, in that scenario, shareholders are informed retrospectively and too late. They are informed in a way that makes it impossible for them to do much about it. That is why we propose that the position should be improved so that shareholders have more control over a situation in which they are currently powerless.

Mr. Hanley: Where in the Companies Act 1967 does it say that shareholders must vote in favour of the whole directors' report? I understood that the matter could be raised separately by the requisite number of shareholders and therefore it can be voted upon separately.

Mr. Gould: Of course, anything can be raised and discussed separately. However, to get any effective action,


a special resolution would have to be tabled. The only effective way of reversing what had happened would be to vote down the whole report.
The Government's arguments against the proposal in new clause I are totally unconvincing.

Mr. Nicholas Baker: What would be the position of directors who proceeded to make a donation against the terms of a resolution carried at an ordinary general meeting if such a resolution had been voted down, albeit if that was not a special resolution? Will the hon. Member for Dagenham (Mr. Gould) release us from our anxieties? Will we get a discount on the price of his new book? Is that the book before him?

Mr. Gould: Yes, this is my book and I am anxious to display it. It is available at the full price. It is called, "A Future for Socialism". Unfortunately, I do not have the right to sell it in large numbers, but I can recommend several excellent book shops which will sell it at its cover price.
In response to the point made by the hon. Member for Dorset, North (Mr. Baker), the problem is that no special resolution could undo what had already happened. A resolution would have to be passed instructing company directors not to make such payments in future. It would be very difficult to be sure that, as shareholders move from one company to another, they keep pace with what has happened and been reported to them retrospectively.
The Government argue that the proposals in new clause I affect only trivial amounts. They may be trivial to the company donors, but they are substantial in terms of financing a political party. In 1987 the donations amounted to £4 million. Indeed, there may be other donations which were not adequately reported. In 1984, a survey of 1,250 companies revealed that 320 had made donations—243 to the Tory party and 110 to front organisations. The proportion of companies making those gifts is quite large. Taylor Woodrow, P and O, Allied Lyons, British and Commonwealth and United Biscuits are among the companies which gave more than £80,000 last year. These are not inconsiderable sums.
The Government's next argument is that advanced by the hon. Member for Richmond and Barnes—that the present arrangements are quite sufficient. The difficulty is that most shareholders are naturally not represented at an ordinary general meeting. Also, and I believe that Conservative Members are unwilling to acknowledge this, many shareholders are not individual or direct shareholders; they are the beneficiaries of or people with interests in pension funds and insurance companies which have major shareholdings on their behalf. There are hundreds of thousands, if not millions, of people whose contributions to pension funds and insurance companies are invested without their knowledge in companies which then, without referring to the shareholders, make political donations to the Tory party. That is an extraordinarily unsatisfactory situation and we should do what we can to correct it.

Mr. Tim Smith: What evidence does the hon. Gentleman have that shareholders, whether direct or indirect, are dissatisfied with the present arrangements?

Mr. Gould: Shortly I shall discuss the polling evidence that reveals public opinion, but the hon. Gentleman's question demonstrates what is wrong with the present situation. As a consequence of the amendment that he moved in Committee, and as a consequence of the status quo that he wants to preserve, it is extremely difficult for shareholders to be aware of, or to express an opinion on, precisely the question to which he has addressed our attention. Because we believe, in the interests of democracy, that shareholders should have that opportunity we want a change to be made.
At an earlier stage in our deliberations the right hon. Member for Braintree (Mr. Newton), then Minister of Trade and Industry, suggested that there was a remedy in the hands of shareholders in the sense that if they were dissatisfied with political donations reported to them, they could sell their shareholding and move on to another company. That doctrine is extraordinary if based on any democratic principle, and it would not even work in practice. Even if an individual shareholder followed that advice, even if he were to traipse around the stock exchange to look for companies that met his criteria and even if he were prepared to accept all the transaction costs that might be involved, he could never be sure that he had not invested in yet another company that was making the political donations to which he had originally objected. He would discover that only when he attended the ordinary general meeting. The Minister and his colleagues quickly dropped that argument and we have not heard much of it since.

Mr. Hanley: I do not want to delay the House, but surely if a prospective shareholder felt so seriously about this matter he could write to the directors to ask them about their policy.

Mr. Gould: Why does a democratic right to exercise control over what is admitted on all sides to be a specific and rather dangerous form of donation depend upon the initiative being taken by the shareholder who fears that he may or may not be aggrieved? If we establish the principle that it is right that shareholders should have some power of control over such matters, that right should be available to them, whether or not they initiate that right. In an election no one suggests that one must apply for a vote before one receives it—one receives a vote by virtue of being a citizen. Similarly, as a shareholder, one should have a vote and that right of control.
The hon. Member for Beaconsfield asked about the evidence as to the opinion of shareholders. The only evidence of which I am aware is a MORI poll that showed that 82 per cent. of the public—admittedly not shareholders in particular—favoured our proposal that shareholders should be consulted before political donations are made. The only instance of a ballot being taken of shareholders was, as far as I am aware, conducted by the National Freight Corporation when no fewer than 87 per cent. of shareholders voted against political donations being made. In the absence of any other evidence I believe that the available evidence is conclusively in favour of our proposition.
If the hon. Member for Beaconsfield wants further convincing on this matter, I refer him to members of his own party. The Charter Movement, which publishes Charter News, said:


Over 90 per cent. of the Party's income in 1987–88 came from donations. No information is given in the accounts about these donations, which makes it all too easy"—
and all too understandable
for our political opponents to allege improprieties, which it is then impossible for Conservative supporters to counter".
The arguments against our proposal do not carry conviction. Our proposal has widespread public support and it flows directly from democratic principle and practice. No amount of special pleading—one might almost say specious pleading—on behalf of the Tory party can displace the proposition in the new clause, which is fully supported by public opinion and which is consonant with common sense and democratic principles.

Mr. Frank Haynes: The Conservatives adopt a one-sided approach to this argument. They made the trade unions consult their members about the political levy and they put that on the statute book. When it comes the other way round, however, they do not want to know. The shareholders are told after the donations have been made and they are not consulted about them. If the Conservatives do not accept what we are suggesting, will my hon. Friend let them know in no uncertain terms that when we get back into office after the next election we shall do it ourselves?

Mr. Gould: My hon. Friend is right to point to the double standards which the Conservatives apply to this important issue and I endorse the point that he has made.
The onus is on the Government, or more particularly the Conservative party, to say why a sensible reform should not be implemented. Their continued opposition to that sensible reform shows that they are prepared to put self interest above public interest. It shows that their constant espousal of shareholder democracy is a sham and how determined they are to keep from the light of day and from proper scrutiny their grubby relationship with their secret backers. It is an act that needs to be cleaned up and if the Tory party will not do that job, Parliament will, and if we have to wait for a Labour Government, Parliament, under that Government, will do that job.

Mr. Nelson: What we have just witnessed is another death throe of the Labour party. Underneath it all it recognises that it has lost the support of enterprise and industry. The only way in which it can make up for that is to try to prevent that part of the economy from contributing freely to a party that stands for an ideology that it perceives to be in the interests of the economy, employers and company employees.
When my hon. Friend the Member for Beaconsfield (Mr. Smith) moved an amendment on this matter in Committee—it was the first subject to be dealt with—it represented an initiative from Conservative Back Benches and was not at the instigation of the Government. It was universally welcomed in principle by Conservative Members because we believe that the directors of a company should decide what is in the best interests of that company; indeed, they are required to do so. Their interests are those of their employees, customers, creditors and shareholders.
All companies are affected one way or another by Government policy, but certain major companies, such as those in the oil industry, the financial services industry and in defence are radically affected by the policies adopted by

political parties and by the Government of the day. I believe that it is proper and above board for those companies to be able to back overtly a party that stands for their interests, be they the interests of their employees, shareholders or interests relating to their specific activities.
The new clause represents an admission by the Labour party that the productive side of the economy knows which political party is backing it. It is only because the Labour party is bereft of the policies that can lead to future stability for companies that it has sought to frustrate the right of those companies to back that party.

Mr. Ian Gow: Will my hon. Friend please read out to the House a list of those companies that make political gifts to sustain and strengthen the Labour party?

Mr. Nelson: I fear that I do not have that information to hand. If my hon. Friend is able to catch your eye, Mr. Deputy Speaker, I hope that he will be able to elucidate on that. It is undoubtedly true that the Labour party receives support from a variety of quarters—from the corporate sector, as well as from the trade unions.
The hon. Member for Ashfield (Mr. Haynes) mentioned the requirement that has been placed on trade unions to ballot their members. The difference is that one can opt out of making political contributions through a trade union, whereas, other than by selling the shares, one cannot opt out of a company of which one is a member. The two cases are fundamentally different.

Mr. Gould: The hon. Gentleman has just made a powerful point in support of our contention. I was also interested in a point that he made a moment ago when he appeared to concede that the effect of passing the new clause would be to "frustrate"—to use his word—the making of such donations to the Tory party. May I take it that he concedes that to introduce this element of shareholder democracy would produce decisions that are different from those currently taken by a small minority of directors?

Mr. Nelson: No, I do not concede that because, as my hon. Friend the Member for Richmond and Barnes (Mr. Hanley) has already said, that right is already available to members of a company. Before the annual general meeting, members of a company are given that company's report and accounts and have adequate time in which to table any necessary resolutions and to obtain support for them. Any board of directors worth its salt—most of the boards of directors of this country's public limited companies are certainly that—would take seriously any such resolution passed at an annual general meeting.

Mr. Derek Fatchett: Parallels with trade unions have been drawn several times. From his vast knowledge of industry, the hon. Gentleman must know that trade unions operate on exactly the same basis as companies. Under the law as it has existed from 1913—and as it still exists, with one major change—trade unions publish their political fund accounts. They present them to their annual meetings—their conferences. In those circumstances, there is an exact parallel with companies. Why did the hon. Gentleman vote for the 1984 trade union legislation, which imposed an additional duty on trade unions—to ballot their members—when he opposes such provisions for shareholders?

Mr. Nelson: Because at that time many members of trade unions could not get out of being members of their trade unions. In many cases, their jobs depended on their trade union membership because of the closed shop. Under that reality, it was essential that there was openness in terms of trade union contributions—I welcome what the hon. Gentleman said on that—and that people had the right to opt out. In my judgment, that position is not analogous to that of a company, because the opting-out provision does not mean the same thing and cannot operate in the same way.

Mr. Nicholas Baker: Will my hon. Friend give way?

Mr. Nelson: Although I do not wish to prolong the debate, I shall give way briefly to my hon. Friend.

Mr. Baker: My hon. Friend has put his finger on the important point, which is the position of directors of a company that has, by its shareholders, voted to disapprove of such payments. I put the point to the hon. Member for Dagenham (Mr. Gould)—who did not answer it—that any directors who persisted in making such donations in the face of such a resolution would not simply be doing something unwise or immoral, but would be laying themselves open to a legal action, instigated by their shareholders. The existing law is not negligible; it is powerful and directors are right to take notice of it.

Mr. Nelson: I am obliged to my hon. Friend and agree 100 per cent. with what he has said.
The Labour party has defended every restrictive trade and labour practice that we have tried to sweep away over recent years. The dock labour scheme is just one example. My right hon. Friend the Secretary of State for Trade and Industry is right to seek to liberalise industry and to promote profitability and reinvestment. Why should industry not be allowed to decide who is helping its ambitions, employees and shareholder interests? Companies already provide facilities for their members to question political contributions, so the new clause is redundant and unnecessary and the House should not accept it.

Mr. David Winnick: We all know which restrictive practice the hon. Member for Chichester (Mr. Nelson) has defended. I have no doubt in my mind that the new clause and our amendment will be heavily defeated. If it was possible for the Conservative party to have a heavier Whip—perhaps a six-line Whip—it would do so. We can rest assured that there will not be a single Tory rebel on this issue. They will all troop through their Lobby accordingly.
I also have no doubt that if people outside the House knew what we were discussing, they would believe that the Opposition have fairness, justice and reason on their side in tabling this new clause. As the beneficiary of donations from companies, the Conservative party is saying, "The law is all right. There is no need to change it." Indeed, even the existing legislation, which was enacted in 1967, was not greeted with any enthusiasm by the Conservative party at that time. The only explanation for all this is that the Conservative party is extremely reluctant to allow undue attention to be paid to the way in which it is so heavily financed by so many companies.
If contributions were made to the Conservative party in a straightforward way, there would perhaps be less reason for tabling the new clause. However, such contributions

are not made in a straightforward way—they are made in a furtive, underhand and murky way, as my hon. Friend the Member for Dagenham (Mr. Gould) has said.
My hon. Friend referred to the river companies. I did not use to know of their existence and I doubt frankly whether many Tory Members knew either. Indeed, at least one Tory Member is nodding in agreement with that comment. However, the river companies existed for many years and the purpose of those fake companies was quite clear. Incidentally, they were publicised in The Independent when the Sunday Times was not keen to publish the story. Their purpose was to channel large sums of money to the Tory party. Because the river companies were never publicised, until those articles appeared most people—including those in the media as well as many politicians—did not know of their existence. I would imagine that their existence was known to just a few people in the higher reaches of the Conservative party.
British United Industrialists is another Tory front organisation. I have certainly known about it for a number of years. The function of that organisation—very likely, it has no other function—is to act as a financial link between various companies and the Tory party. Indeed, 90 per cent. of the income of British United Industrialists is simply passed on to Conservative Central Office. At one stage in the 1970s it was decided that contributions to the Conservative party should be made out to the "free enterprise account" at Drummonds bank.
The Conservative party does not even publish a properly audited balance sheet of its finances. That is why there is so much concern about the manner in which one of the state's two major parties organises its finances in such an underhand and furtive way. It does so because it is frightened that undue attention might be paid to the sources of its money.
If, as the hon. Member for Chichester said, the Conservative party is proud of the way in which it receives such donations, the question from myself and my hon. Friends is surely obvious—why not publish the full details? Why behave in this underhand way? The explanation is obvious also.
Lord Taylor, the president of Taylor Woodrow, who is a leading light in these financial dealings, and whose own company is so generous to Tory funds, is quoted as saying:
We had to fight Harold Macmillan to avoid him going socialist. And, but for Aims of Industry, Edward Heath would have agreed to putting union leaders on the boards of companies.
Clearly the present Prime Minister is much more to the liking of Lord Taylor as party leader than were two of her predecessors.
Under existing legislation a company needs only list the amount under political donations. It can state that it is making a contribution to BUI, and nothing else. The shareholders will not know how that money will be sent on from BUI to the Conservative party, or perhaps to another front organisation. The new clause would mean that such contributions would be properly and separately debated at general meetings, which explains why Conservatives are so opposed to making the change.
6 pm
Sometimes when I study the way in which the Tory party organises its finances I wonder whether Richard Nixon and those associated with him mastermind the arrangements. He knew all about laundering money; perhaps he could have given the Tory party more advice.


Money is being laundered—the Minister shakes his head, but it certainly is, and the river companies would not have existed had they not been considered necessary by Tory central office.
We are not talking about peanuts—about donations of £100 or £400 or so. Last year 16 companies alone made donations of £50,000 or more each to the Conservative party or front organisations, and the top 10 donated more than £1·5 million. The largest donation came from Taylor Woodrow, which last year contributed more than £111,000 to the Conservative party.
I want to compare briefly the subject under debate with the way in which this same Government insisted in legislation that unions must hold ballots every ten years on whether to have a political fund. As I said when the legislation was debated, at their annual conferences unions could decide whether they wanted to continue a political fund or to discontinue or start one. The law on that was perfectly clear. Moreover, as the hon. Member for Chichester pointed out, any member of a union with a political fund can opt out—that has been the position since 1913. Any member of any trade union can tell the branch secretary that he does not want to contribute to a political fund and that is that.
Shareholders cannot opt out in the same way. Despite all the safeguards in place at the time, the Conservative party—with no members dissenting—decided to change the law, and the trade unions had to hold a ballot every 10 years. It so happens that victory went to the trade unions. Not only did all the unions with political funds vote to keep them: one or two that never had one decided to begin one.
However, the purpose of the exercise was quite different—the Government tried to cripple the finances of their major opponents. We have never denied of course that the Labour party's funds have always been far more limited than those of the Conservative party, but the Government were not satisfied and tried to undermine still further the financial position of their political opponents—and that from a party which claims to be in favour of parliamentary democracy.
We are not trying in this new clause to cripple the funds of the Tory party. The proposed clause will not be passed, hut: if it were, shareholders would be able to approve, or not, donations to the Conservative party. It is likely that they would usually approve them—I would not challenge that.
In case some Conservative Members believe that I am exaggerating—I always try to avoid that—one of the leading members of the Charter movement inside the Tory party, Peter Hardy, is quoted as saying that he has long suspected that the Conservative party has hidden reserves in secret bank accounts. If I or my hon. Friends had said that, we would have been denounced as exaggerating as usual. Presumably, Peter Hardy is as much an active Conservative supporter as any Conservative Member—the difference being that he and others in the Charter movement, such as Eric Chalker, happen to believe that their party should be run in a straightforward and honest manner. I see no reason why they should be criticised for that point of view.
My hon. Friend the Member for Ashfield (Mr. Haynes) told my hon. Friend the Member for Dagenham that he hoped that a Labour Government would effect the sort of changes in the financing of political parties which will never he made as long as the Conservative party has a

majority in the House. I agree. Perhaps we should have brought about such changes when we were in office: it is regrettable that we did not.
Conservative Members may shrug this off and call it the usual Labour party propaganda, but the more they resist modest reforms along these lines the more determined the Labour party will be when in office to make substantial changes to ensure that the Tory party is put on the same footing as the Labour party. So if trade unions which, to a large extent, finance the Labour party need to hold political fund ballots every 10 years, alongside observing the provisions from before the 1984 Act, it is only right and proper that the same should apply to companies and shareholders.
Either we change the law along the lines being suggested now, or we perhaps should come to the conclusion that the financing of the Conservative party by big business and of my party, in the main, by trade unions is wrong, and that the remedy lies in some form of state funding. There is already state funding of opposition parties, from which the Conservative party benefited when it formed the Opposition. I am not entirely sure that that is the best remedy but I am coming round to that view more and more. Perhaps the real remedy to end many of the present controversies would be for the state to finance political parties in accordance with the number of votes they received at the previous general election. I am not entirely convinced that that is the solution, but perhaps we should consider it further at some stage.

Mr. Richard Shepherd: The last point made by the hon. Member for Walsall, North (Mr. Winnick) has some merit. The most extraordinary thing about this debate is the sense of déja vu that it conveys. I had not appreciated that the Opposition had been converted so solidly by the arguments advanced by my party and the Government during the reforms of the trade union movement.
What is sauce for the goose is sauce for the gander. All the arguments adduced by the Opposition spokesman, the hon. Member for Dagenham (Mr. Gould), tailor neatly with most of the arguments adduced by the Government when requiring ballots on trade union political funds. It can be argued with a sense of equity that it is not unreasonable that companies should ask their shareholders directly whether they should make a political donation. It must be reasonable.
Some of my Conservative colleagues have said that it does not matter, and that they can be sacked anyway. I have listened to the same arguments from the trade union movement. For 60, 70 or 80 glorious years it had the perfect source of finance, and the leadership did not have to trouble the membership too much about detail. It was the leadership's right to grant funds to the Labour party. Indeed, the Labour party was created by the trade union movement.
Our anxiety is that the public may perceive that we are the creation of big business. Clearly it will be a case of what is sauce for the goose is sauce for the gander if it is exposed that our support comes from big business. There should be a more relaxed atmosphere. The argument that the decision should be put to the shareholders may well not serve us ill, as a party. There is no evidence to suggest that it will. There is a lot of evidence for the argument advanced


by my hon. Friend the Member for Chichester (Mr. Nelson), that the judgment of the majority of shareholders will be in favour of the continuation of donations.
I remember the Labour party's trepidation at the prospect of change in trade union legislation. There was anxiety. I have to acknowledge that there was also some triumphalism among Conservative Members that that legislation would be the end of the Labour movement as we knew it. It was thought that trade unionists who were deeply disaffected and disappointed by the conduct of the Labour party would withhold funds. In the event, it did not turn out that way. As the hon. Member for Walsall, North has just said, the legislation consolidated Labour's strength and the donations, strangely enough.
I do not see any reason why there should be any mystery. It is not an unreasonable proposition that shareholders should vote directly on donations to political parties. That is why I call this sauce for the goose and sauce for the gander.
There is a sense of equity and fairness in our nation. It looks blindly partisan if we say that we expect rules and regulations to be imposed on our political opponents, but that they must not apply to us. Our arguments have mirrored those made by a nervous Labour party when it had to confront the possibility of unions having to ballot their members on political donations. Companies may decide to donate money to the Labour party or that wealthy individuals, through companies, may make donations to the S whatever it is called—the SDP, I think.
It is important that the Conservative party shows itself to be fair-minded about this matter, particularly these days. The Government should treat this issue with caution for fear that, should we reject a measure that is essentially fair, the public perception will be that we have become so particular in these matters that we want only to reinforce our own finances. We will find it in our interests to do this because the measure would give confidence to company boards, supported by the votes of their shareholders, if that is their wish.
I beg my colleagues on the Front Bench to look at this proposal with a more open mind.

Mr. Charles Kennedy: I support new clause I. [Interruption.] Does the hon. Gentleman wish to intervene?

Mr. D. N. Campbell-Savours: I did not want to intervene. I was merely asking my hon. Friend the Member for Walsall, North (Mr. Winnick), from a sedentary position, whether the British School of Motoring contribution has been sorted out yet.

Mr. Kennedy: The hon. Member for Workington (Mr. Campbel-Savours) was kind enough to give me advance warning that he intended to crack that hilarious joke, which has never been heard in this Chamber before. I gather that it refers to a body which was once known as the British Liberal party, of which I was not a member. Therefore, I am not prepared to answer or to take responsibility.
I agree with the new clause although, after listening to the speech of the hon. Member for Walsall, North (Mr. Winnick), I feel that we should go for full state funding of political parties. Ultimately, that will be seen to be the logical step, and it is preferable to what was fairly

described by the hon. Member for Aldridge-Brownhills (Mr. Shepherd) as the sauce for the goose, sauce for the gander situation with which we have been presented in this debate, and in previous debates on the Bill.
6.15 pm
The frank and straightforward speech of the hon. Member for Walsall, North highlighted what, from the point of view of a third political party, is a basic criticism of the whole system. He rightly said that the bulk of Labour party funding comes from the trade union movement—I say good luck if it wants to use finances in that way—and that the bulk of Conservative party funding comes from the corporate and the private sector.
The hon. Member for Dagenham (Mr. Gould) was critical of the Department of Trade and Industry's response to the Monopolies and Mergers Commission's report on the brewing industry. Conservative Members were critical of the Labour party's attitude to trade union legislation and to the promises in the policy review document that there would be further movement in a direction that the trade unions want. All that underpins the fundamentally unhealthy nature of having a political system that is so directly dependent, on one side of the political divide, on private sector finance and, on the other side, on the trade union movement. That clearly influences Government and Opposition policies to an unhealthy and dangerous extent. That approach has done much legislative damage to the body politic for many generations.

Mr. Michael Brown: Can the hon. Gentleman tell the House whether he has arrived at that conclusion because of the experience of his former party—the SDP—which I understand received approximately £9,975 in the year up to 1987? It may be that that £10,000 now goes to the Liberal Democrats. Perhaps the hon. Gentleman is embarrassed by that. [HON. MEMBERS: "From Lonrho."] Yes, from Lonrho—I think that you will have heard of that company, Mr. Deputy Speaker. Is it embarrassment at receiving that sort of donation that has led the hon. Member to the conclusion that he has just put to the House?

Mr. Kennedy: I can assure the hon. Gentleman that the party of which I am a member has not received, and is unlikely to receive, any money from Lonrho, and would turn it down if it were offered. If that party which adheres to the right hon. Member for Plymouth, Devonport (Dr. Owen) receives money from Lonrho, that is a question for him. If money from that source was paid to the then SDP in 1987, I was not aware of it. I would not have supported it, and any questions about it should be directed to the politician who now purports to be the leader of that party.

Mr. Brown: Should the hon. Gentleman not be arguing that it is a question not whether the Conservative party needs to publish its accounts but whether the party of which he was once a member ought to publish its accounts more widely?

Mr. Kennedy: I was once a member of that party, but if the hon. Gentleman studies the legal and constitutional terms of the merger between the Social Democractic party with the British Liberal party, he will find that that party is still within the merged party and therefore those people, to whom I shall refer as provisionals in all this, must speak for themselves. I do not take responsibility for them.
I shall return to my basic contention—[HON. MEMBERS: "It is the very man—the hon. Member for Caithness and Sutherland (Mr. Maclennan)."] I am sure my hon. Friend will write to the hon. Gentleman to answer his question. I should add that I am sponsored by nobody.
Conservative and Labour Members have criticised each other's parties. However, in defending their own parties they highlighted the weakness and the unsatisfactory nature of the entire system. It cannot be healthy for the body politic of the country for industry to be bound financially to one side of the political divide. That is sure to influence legislation and party political attitudes and it is the mirror image of what happens on the other side of the political divide.
Criticism has been levelled at my party and at some of its members. When the SDP came into being, we said that one cannot build a party that will not be in somebody's pocket unless one is prepared to dig into one's own pocket. The Liberal Democrats adhere to that principle. The present financial arrangements will not be changed by the Bill. The overwhelming bulk of our funding comes from membership subscriptions and through direct mail appeals to members and supporters. At the end of the day, that is healthier and fairer than the funding of political parties related to the proportion of the board of directors that a party has been able to attract at the previous election.
If the Government will not accept the new clause as a small step, I hope they will take an early opportunity to redress the gross injustice, imbalance and incoherence of the political system which arise from our present unsatisfactory arrangements.

Mr. Gow: The hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) criticises political parties that receive donations from companies. He said that he did not like money going from trade unions to the Labour party and from companies to the Conservative party. He suggested that such donations, and presumably other voluntary donations, should cease and that the British people should be obliged to finance the Social and Liberal Democrats, the Labour party, the Conservative party and the Scottish National party. So muddled is the hon. Gentleman's thinking that one could conclude that possibly even Sinn Fein should be supported in that way. That proposal does not find much favour among my hon. Friends, although my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) seemed to be flirting with the idea.
Those who wish to support political parties, whether they are members of trade unions or companies, should be free to do so. I am strongly opposed to imposing additional taxation on the British people so that they can finance political parties of whose purposes they may disapprove.
The hon. Member for Ross, Cromarty and Skye is immensely and rightly popular in the House, but his speech contained another sad characteristic. He criticised political parties that receive donations from companies and was asked by my hon. Friend the Member for Brigg and Cleethorpes (Mr. Brown) about Lonrho. The hon. Gentleman said that he knew nothing about it. Lonrho has extensive trade dealings with the Republic of South Africa. The Financial Times of 23 February 1988, a newspaper well known to the hon. Member for Ross, Cromarty and Skye, said:
Lonrho, mining, trading and industrial company headed by Mr. Tiny Rowland, donated £9,775 to the Social Democratic Party last year.

That was in 1987. That means that at one time Lonrho, with its vast interests in South Africa, thought that it might hedge its bets and make a donation to what was then. I think, called the Alliance. The hon. Gentleman will correct me if I have my timing wrong.
At that time, some companies and even a few people believed that it was possible for the Alliance to attract some support from the British people. I have news for the hon. Gentleman. No donation will be forthcoming from Lonrho at the next general election to the Social and Liberal Democrats. The support for that party from the trade union movement and companies and from the British people will be very slender.

Dame Elaine Kellett-Bowman: What about the learner drivers?

Mr. Gow: I shall come to that later.
The hon. Member for Ross, Cromarty and Skye complained about the way in which political parties are funded. We have seen that opportunistic change of mind before by the SLD, because it characterised the abandonment of its previous support for the policy of first past the post. The SLD has grown out of the Liberal party. When the Liberal party was amassing great majorities in the kingdom by means of first past the post, it was in favour of that system. When it discovered that its support was waning and that the only way in which it could have more Members of Parliament was to alter the rules, it was in favour of doing so.
It is a new doctrine for the inheritors of the Liberal party now to say that they are in favour of state funding for political parties and against trade unions, companies or individuals being allowed to support such parties. The reason for that is simple. It is that everybody knows that the SLD is bust. That is why it says that it should be financed by the Government. That is a most dangerous argument and it again reveals that, when the going gets rough and when that party cannot support itself by the existing rules of finance for the electoral system, it will alter course.

Mr. Graham Allen: I support the hon. Gentleman's view about not levying the taxpayer. People should not have to pay into a state fund that finances political parties. Will the hon. Gentleman extend that argument to shareholders? Should they be levied for money for the Conservative party? Would he go further and say that consumers of beer, supermarket goods and insurance and other services should be balloted and consulted before money is taken from them?

Mr. Gow: I propose to deal with that matter, and I shall again give way to the hon. Gentleman if he is dissatisfied with what I have to say.
The new clause contains a proposal that retrospective approval will have to be given at an annual general meeting for donations that have been made by the board of directors. A board of directors should be free to carry out the duties laid upon it by the memorandum and articles of association of the company concerned and, of course, must act within the constraints of the Companies Acts. It should be up to directors to take decisions that fall properly to them. Of course directors are accountable to and removable by shareholders at the annual general


meeting. If shareholders do not like the decisions taken by the directors, those directors can be and frequently are removed.
The new clause seeks to set a dangerous precedent. If retrospective approval has to be given for a political donation, will it also be required if directors enter into a contract with the Republic of South Africa? That question will appeal to Opposition Members. That is an interesting matter that exercised the attention of my right hon. Friend the Prime Minister at Kuala Lumpur.
I am glad that the shadow Chancellor is in his place. I understand that some Opposition Members say that specific approval should be given by shareholders if a company enters into a contract with the Republic of South Africa. Some may say that shareholders should be asked before donations are made to charity, or that specific approval should be required before a donation is made to disaster funds. It is perfectly proper to rely on the protection given in the Companies Act 1967, and I believe that the hon. Member for Wallsend (Mr. Garrett) was in the House at that time. That Act requires disclosure of sums of more than £200.
6.30 pm
The law as presently in force requires full disclosure. It is obvious that shareholders in general meetings can issue an instruction, through resolution, that no further political donations should be made. It is possible for any shareholder who does not like the donations policy of his company to sell his shares, or not to buy them if it has been the practice of the company to make donations.
I wish to express my enduring thanks to those excellent and wise British companies and British people who continue to make donations to the Conservative party. Those people and those companies perceive in my judgment correctly—that their true interests lie in the continuation of a Conservative Government.

Mr. Campbell-Savours: When the current arrangements for payments to political parties by companies were devised conditions were different. Only a small minority of the wider public were in a position to acquire and retain shares. We were not in what is described today as a "shareholder democracy". As one widens share ownership, one is required to reconsider the powers that are available to shareholders to influence arrangements in companies. Many of the Government's arguments about widening shareholder democracy, certainly throughout the privatisation debates, were about ensuring that shareholders—the wider public—have a stake in and some influence over the future and the potential for business. If that is the case, surely the matter should not be kept in isolation, and consideration should be given by the House to change.
My hon. Friend the Member for Dagenham (Mr. Gould) has put to the House the proposition that simpler and more equal treatment should be meted out to trade unions, as it is to companies, regarding their political contributions. He has sought only to ensure that trade unions are treated no differently from companies and vice versa. I do not see that it is possible to argue against that. I can concur with every word of the speech of the hon. Member for Aldridge-Brownhills (Mr. Shepherd). If one is being equal in treatment, one must be open-minded about

those matters. If a political party might lose out by way of that arrangement, it drives us to consider the whole question of state funding of political parties.
The hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) mentioned the British School of Motoring. I will not score any political points by drawing attention to what happened some years ago. The British School of Motoring was making contributions of several hundred thousand pounds to the Liberal party and the Liberal party was receiving them because it has no other way of funding its operation. I do not blame the Liberal party for taking the money. If that is the only way to fund one's political party, one must do it. However, we all know that what happened on that occasion was wrong. When I looked into that matter in some detail I was able to locate a debate in the House of Lords during which a Liberal peer had moved an amendment to legislation on driving schools. In the eyes of the public and Parliament his motive in moving that amendment was related to the political contribution that had been made. It may be that peer moved that amendment for the most altruistic of reasons. However, when the public saw the facts and realised that his political party was being funded by way of a substantial contribution, they naturally drew the conclusion that there must be some connection.
I tell that story only to show that, because of the system as it is presently arranged, the public will inevitably be suspicious. Every contribution of weight that is made to the Conservative party must inevitably lead some members of the public to believe that there may be a connection with the treatment that the Conservative party gives to big business or the way particular Secretaries of State and Departments might handle business that may help companies that make contributions. I am not necessarily saying that that is what happens, but if the public are led to believe that there may be a connection, it further generates suspicion in their minds as to political contribution as against political pay-off.

Mr. Michael Brown: The hon. Gentleman is making a very interesting and sincerely held point. However, by the same token, could it be argued—although I do not argue it—that any hon. Member who is sponsored by a trade union will be perceived in the same way?

Mr. Allen: They do not make a direct contribution.

Mr. Brown: The hon. Gentleman says that it is not a direct contribution. Nevertheless, the public may still be suspicious. When an hon. Member speaks on behalf of a large mining community in his constituency, and if he happens to be sponsored by a miners' union, nobody in the House disregards his points simply because he is sponsored by that union. The hon. Gentleman's point falls down on those grounds.

Mr. Campbell-Savours: The hon. Gentleman presumes that I will be partisan in my reply, but I do not intend to be so. I accept that inevitably the public will be suspicious. Whether there is a need for that suspicion is another matter. As the House knows, sponsored Members of Parliament do not receive money from trade unions. I am sponsored by the Confederation of Health Service Employees but it pays me nothing and I would accept nothing. I would not draw a penny of expenses from the union. However, I accept that the public might conclude that there was a connection between the way in which I


conduct myself in the Chamber and the sponsorship arrangement in the background. All I am doing—as did the hon. Member for Aldridge-Brownhills—is trying to be neutral and say that there should be equal treatment. The hon. Gentleman did not talk in terms of suspicion, but we should not rule out the possibility that that might exist. The proof can be found in the case of BSM and the Liberal party.
Other cases have recently come to light. I know that the case of the Westminster cemeteries and Lady Porter is controversial, and I shall try to deal with it neutrally. During the inquiries by Westminster city council into all that happened in Westminster, an argument developed about how the Conservative party was funded during the 1983 election. Many people could not work out where the money to service the Conservative campaign had come from. It may he that all the funding was proper, honourable and above board. However, as the investigations and inquiries developed and as queries about the river companies were raised in the national media, that sparked off the suspicion—wearing a more political hat than I am now, I willingly fostered it—in the minds of the general public that something might be wrong. Such suspicion arises only from the fact that at the moment we have a system that allows companies to allocate money to political parties without any accountability. I would argue that they should not be in a position to make those contributions because I am a supporter of state funding of political parties.
My hon. Friend the Member for Dagenham hinted that the Labour Government may look sympathetically at the need to legislate to introduce such funding. However, I do not see that hint as an attempt to penalise the Conservative party in the way that the Conservative party thought that it was penalising the Labour party in 1985, through employment legislation. Were the Labour party committed to legislate on funding because we have a duty to protect all political parties, irrespective of what they believe, and ensure that they are properly funded, that would spark off the necessary debate that we need on state funding of political parties. The hon. Member for Eastbourne (Mr. Gow) is obviously opposed to this funding, but in such conditions he might look more favourably on what I think is a neutral position to take on funding.
I only wish that the debate were less partisan. Conservative Members seem so defensive about a system that, like the hon. Member for Aldridge-Brownhills, they know is morally and in equity wrong. Instead of locking themselves into a position of inflexibility, a few more charitable gestures on the principles involved should be the order of the day. Perhaps before the end of the debate we shall have some words along those lines.

Mr. Tim Smith: I join the hon. Member of Dagenham (Mr. Gould) in welcoming my hon. Friend the Member for Wokingham (Mr. Redwood) to the Front Bench. I was pleased when he was appointed to his new position in July because I believe that he is peculiarly well qualified to take over this responsibility, and we shall see that as our debates proceed.
I listened carefully to what the hon. Member for Workington (Mr. Campbell-Savours) said, and we understand that he favours state funding of political parties. However, that is not what the debate is about. It is about how companies should determine political

donations. We should establish the principle of accountability and openness. We heard a lot at the beginning of the debate from the hon. Member for Dagenham about concealment, murkiness and all the rest. However, we know that the saga that was revealed in all its shock horror-status by The Independent related to what happened before the Companies Act 1967. It has specific and clear requirements about the disclosure of political and charitable donations, and we have heard about those. The key to this is that people should know what companies are doing. We now know from its accounts that Lonrho made a donation to the SDP and that many companies make donations to the Conservative party.

Mr. Gould: What about private companies?

Mr. Smith: I think that the same provision applies to private companies as to public companies, but I stand to be corrected. The main contributions come from the large public listed companies and disclosure is required. Even if they make the contribution to British United Industrialists, one would have thought that, because of the number of times that that organisation has been mentioned in our debate, most people would know what it stood for. The argument is about accountability and openness, and shareholders know what is happening and are in a position to challenge it if they wish to do so, and we have heard of the different ways in which they can do that.
The hon. Member for Dagenham said that it is wrong that directors do things with other people's money, but that is what directors are paid for. They are the stewards of the shareholder's money, and it is their job to decide how to dispense that money to the best benefit of all the shareholders.

Mr. Gould: Is there not a distinction between what directors do with the company's money in its commercial interests and what they do by way of donation to political and charitable causes? If the hon. Gentleman would not accept that, is he denying the basis of the special provisions of the Companies Act, which require disclosure in those cases?

Mr. Smith: Before a board of directors makes a decision to make a donation to a political party, it has a serious debate on the matter. The overriding consideration in that debate is the commercial interest. The directors ask themselves whether it is in the commercial interest of the company for it to make that donation. Many companies, not unnaturally, take the view that it is in the interests of the company to make a donation to the Conservative party because it is the party which stands for free enterprise and supports the private sector. Therefore, that is an entirely reasonable thing to do.

Mr. Nicholas Baker: Companies see donations sent in certain political directions as more in the interests of freedom and enterprise. Is not the solution something that was mentioned in Committee when the hon. Member for Dagenham (Mr. Gould) was not there to hear it? The hon. Member for Workington (Mr. Campbell-Savours) was fair, but the hon. Member for Dagenham was motivated by revenge, and his tone was invidious. Is not the solution for the Labour party to make itself so in favour of freedom of enterprise that it will attract donations? We come back


to what the debate is all about when I say that the answer to making the Labour party more acceptable is, I suspect, in the book sitting by the hon. Member for Dagenham.

Mr. Smith: My hon. Friend may be right about the book. I have bought a copy and am looking forward to reading it. The key to the matter is the commercial interest of the company, and it is on that basis that companies decide whether to make donations to political parties.

Mr. Winnick: What evidence does the hon. Gentleman have of the serious discussions that he claims go on in companies about such donations? Are we to understand that, for example, in Taylor Woodrow—bearing in mind who is president of that company—there is a lengthy and serious discussion of the pros and cons? The discussion is likely to be similar to those that used to go on in the politburo of the Soviet Communist party. Why do not companies make it clear that they are donating to the Conservative party? What is all this business about British United Industrialists? Why, unless it is to deceive, do they use a front organisation?

Mr. Smith: I have already dealt with that last point. It is self-evident that a decision to make a donation to a political party is a major decision by a board of directors, and not one made in two or three minutes. It is discussed carefully and many companies refuse, as a matter of company policy, to make a donation to any political party simply because they do not believe, wrongly in my view, that it would be in their commercial interests to do so. The commercial interests of the company are the foremost consideration, and the directors have the responsibility—that is why they are elected by shareholders—to make such decisions. Were we to agree to the new clause, we would be undermining the principles on which company law is based. Shareholders delegate their responsibility to directors. If they do not like what the directors are doing, they can get rid of the directors by voting them out of office. Alternatively, as my hon. Friend the Member for Eastbourne (Mr. Gow) says, they can sell their shares. Those are the options open to them.
That brings me to the distinction between shareholders and trade unionists. We have heard much about parallels, and my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd) has said that in equity we should treat shareholders and trade unionists equally. There are, however, fundamental distinctions. An individual can be a shareholder in several companies, and many people are in that position. If such an individual does not like the stock, he can sell it, but that option is not open to a trade unionist. There are many people who, because of their employment, have to be members of a trade union. They have little choice in the matter. Furthermore, they cannot switch from one union to another. Even more important, if a trade union determines to set up a political fund, it can then have a major influence in determining the policy of the Labour party. Its block vote at the Labour party conference may play a major part in determining that party's policy. No companies have an equivalent role in the Conservative party.

Mr. Richard Shepherd: It is my understanding that it is the Government's intention to legislate to make unlawful the closed shop, and that is legislation which I shall

support. That being so, the burden of my hon. Friend's argument is not sustainable. Is he saying that trade unionists may or may not belong to a trade union? If that is so, they are not obliged to make donations or vote for a contribution to be made to the political fund. This is an argument that is based on sauce for the goose being sauce for the gander. Surely it is not an unreasonable principle that shareholders should have the opportunity to vote on the issue.

Mr. Smith: I understand the strength of my hon. Friend's feeling on this issue but I do not accept that there is a parallel between companies and trade unions. I dealt with these matters when I developed the argument in Committee. I know that it is an embarrassment to the Labour party that trade unions have major block votes and can determine the Labour party's policy. There is no comparable arrangement within the Conservative party for companies. That is why the system is such an embarrassment to the Labour party, and I understand that it is considering changing it. That is one fundamental difference, and I have mentioned others.
I am saying that we should have a satisfactory system of accountability and openness. We should not undermine the principles of company law on which legislation is currently based.

Mr. Fatchett: I think that the hon. Member for Aldridge-Brownhills (Mr. Shepherd) has summed up the key issues, especially when he dealt with parity of treatment. That issue goes to the heart of the political system and the heart of democracy. There have been one or two attempts by Conservative Members to obscure the issues. For example, the hon. Member for Eastbourne (Mr. Gow) has talked about retrospective legislation and retrospective decision making. With respect, the hon. Gentleman's examples of contracts with South Africa do not relate to the issues that arise as a result of political funding. There has been some embarrassment among Conservative Members because there has been no willingness to meet the arguments advanced by the hon. Member for Aldridge-Brownhills, which are based on parity of treatment.
There has been a substantial difference historically between the ways in which trade unions have been able to make political donations and the ways in which companies have been able to do so. Inititally, trade unions have to ballot their members under the 1913 legislation if they are to have a political fund. No such condition applies to companies. Trade unions have to give their members the right to opt out, but no such condition applies to companies. The hon. Member for Beaconsfield (Mr. Smith) said that an individual could move his shares from one company to another, but he has overlooked two factors. As my hon. Friend the Member for Workington (Mr. Campbell-Savours) said, someone might want to continue to invest in a certain company but not invest in the Conservative party. The hon. Member for Beaconsfield also overlooked the fact that many shareholdings are held by institutions, and institutions may not give their members the opportunity to opt out of a particular shareholding. The defence argued by the hon. Member for Beaconsfield does not hold water.
Within the trade union structure there is provision for ballots and the right to opt out, but in addition there is the right to study the political fund accounts at each annual


conference, which is the governing body. Conservative Members argue that the same right exists for shareholders, but shareholders do not have the rights of a ballot or of opting out.
We are told that there is no need for shareholders to have further rights because the disclosure provisions are sufficient. On the other hand, we are told that boards of directors take decisions that are in the commercial interests of their companies. It appears that one of those decisions is to make a donation to the party which believes in private enterprise, that being the Conservative party. Conservative Members should understand that what the Government are doing to the economy will undermine a great deal of private enterprise within the industrial sector.
The third largest donation made to the Conservative party in 1988 came from British and Commonwealth Holdings plc. The report of the annual general meeting of that company appeared in the Financial Times on 28 September. Presumably the decision to make the donation was taken in the interests of the company's shareholders because it is thought that the Conservative party is good for the company. The House will probably be aware that the profits of British and Commonwealth Holdings plc have declined in the last financial year by 45 per cent. The company' chairman, Mr. John Gunn, attributes that decline to one factor—the Government's reliance upon high interest rates. It seems that directors do not always take decisions that are in the best interests of their shareholders.
I had the pleasure of considering in Committee the measure which became the Trade Union Act 1984. We were told by Conservative Members that there was a need for constant accountability, a constant flow of information and a constant process of legitimacy before trade unions could be allowed to make political donations. I think that my hon. Friend the Member for Walsall, North (Mr. Winnick) was correct when he said that at that stage there was some enthusiasm among Conservative Members in the expectation that such provisions would lead to a substantial decline in the Labour party's funding. They voted for a provision that meant that trade unions had to ballot their members once every 10 years to reaffirm the right to have a political fund. There is no similar provision or right for shareholders, and Conservative Members have not argued that there should be one. When Conservative Members said that they wanted a provision in the 1984 Act that would confirm trade unionists' support for political donations, why did they decide not to extend the same right to shareholders? The conditions that apply to trade unions do not apply to companies and their political donations.
The hon. Member for Aldridge-Brownhills is right when it comes to the essence of the argument, and that does not necessarily mean reducing the £3·5 million that is provided to the Conservative party each year in corporate donations. The argument turns on making all donations accountable, open and legitimate, and that goes to the heart of the democratic process.

Mr. Allen: This has been a fairly lighthearted excursion into political funding. It needs to be put on record, however, whether the intention of the Trade Union Act 1984 was as frivolous as seems to be suggested. In my view, the intention was to undermine completely the funding of the Labour party so that the party would be destroyed, thereby creating a one-party state.

Madam Deputy Speaker (Miss Betty Boothroyd): Order. The hon. Gentleman's intervention is interesting but not relevant.

Mr. Fatchett: I confirm what I perceived to be the intentions of Conservative Members through the 1984 legislation—to undermine the funding given to the Labour party and, in effect, to create almost a one-party state. The intention was to take the financial life blood away from the Labour party.
7 pm
Reference has been made to books and to the pushing of various publications. My hon. Friend the Member for Dagenham (Mr. Gould) has promoted his book. I want to tell the House about an excellent book on the trade union political fund ballot. Any hon. Member who wishes to buy a copy has only to ask me, and I shall tell him at which bookshop he can buy it. I will not be diverted——

Mr. Allen: What about television advertising?

Mr. Fatchett: That is without television——

Mr. Allen: It can be on television next week.

Mr. Fatchett: I want to return to the point made by the hon. Member for Aldridge-Brownhills, which is that this debate goes to the heart of the political system and to the heart of democracy. When there is openness about political contributions, as there is in the relationship between trade unions and the Labour party, there can be no suggestion that those contributions are used for particular purposes. However, when the system is not open, when company chairmen and directors who donate to the Tory party gain more than their fair share of honours—as a result, one suspects, of those donations—when influence is exercised by various individuals, the argument for openness and accountability becomes that much stronger.
We are not trying to reduce donations to the Conservative party; we are asking for parity of treatment. We want an open democracy with accountability by trade unions to trade unionists and by companies to shareholders. That is the essence of the argument and hon. Members should not obscure it by disclosure or by an embarrassing defence of the Conservative party's vested interests. We must relate to the issue, to parity and to democracy. If the Minister devoted his intellectual powers to that argument, I am sure that he would support new clause 1.

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. John Redwood): I thank the hon. Member for Dagenham (Mr. Gould) and my hon. Friend the Member for Beaconsfield (Mr. Smith) for their kind remarks.
I wish first to respond to my hon. Friend the Member for Chichester (Mr. Nelson), who questioned the number of amendments tabled and the basis of our debates today and tomorrow. As all hon. Members can see, there are a number of Government amendments, but most of them comprise one or two types—they are either amendments to take on board the very good points made in Committee, or they result from consultation with a range of professional interests and other groups and are technically consequential upon that. I hope that there will be a spirit of co-operation in the House as most of the amendments are


non-political. I hope that, as we make progress, I can offer assistance to those who make good points and, wherever possible, I hope to accommodate some of their wishes.
We began this debate with the one highly contentious issue that was bound to arise. There is a sense of déja vu because most of the ground has been well trodden already. The Opposition have not put forward any new arguments tonight that might have added to our previous debates. As others have sketched, a good piece of legislation—the 1967 Act, introduced by a Labour Government—is already in place and we are happy with the disclosure requirements that it places on companies. We intend to ensure that those requirements are not only in force, but are fully enforced. We shall carefully consider any point raised by any hon. Member who believes that there has been some dereliction of duty in the enforcement of those clear disclosure provisions.
Members of companies need to know whether donations are being made, which is the purpose of the 1967 Act. That is bolstered by good proposals about company democracy. A range of powers would give shareholders the right at annual general meetings to raise questions, to table ordinary resolutions and to put pressure on boards of directors. Above all, there is a great deal of choice for shareholders. I know that some like to construct what they call "ethical portfolios", which do not include any company that invests in South Africa. As only one in four of the top 100 companies are wise enough to make donations to the Conservative party, there is plenty of scope and choice to construct an apolitical portfolio. However, I share my hon. Friends' view that not many, if any, of the companies in the top 100 make donations to the Labour party, so it would be quite difficult to construct a Socialist portfolio of companies. That is the problem that has led to this jealousy clause that we are debating.
The issue should be put in perspective. To those hon. Members who would raise the question of symmetry of treatment between trade unions and companies, I must repeat that there is extensive machinery within companies, within the company law framework, which we support and intend to ensure continues. It should also be recognised that the trade unions make a much larger contribution proportionately, and in total, to the Labour party than do the top companies to the Conservative cause. In 1987 alone, one union gave £5 million—a stunning sum. The reason why the Conservative party enjoys more funds in total and does not have the same financial difficulties that so often face the Opposition is its strong basis of mass membership. It is the only party with well over 1 million members. It is an active party, well organised and capable of raising money from a range of donations from people of all sorts and styles——

Mr. John Garrett: Tea dances.

Mr. Redmond: Yes, tea dances do raise money for the Conservative party—and why not? People can have fun and they can raise money for the one good cause in this place.
The origins of the Labour party's problems lie in the fact that they do not have money coming from the companies' sector. It is on this point that I must take issue with the hon. Member for Dagenham. He need not worry because I do not intend to savage him tonight. Indeed, he

has done a signal good service. He has produced a book that reveals in great detail exactly how he has moved well to the Left of the right hon. Member for Chesterfield (Mr. Benn), who once held many strong views on industrial policy and even had the benefit of being able to implement those views so that the public could recognise just how dreadful they were.
I can well understand why companies will vote massively to support a Conservative Government if a party insists on threatening shareholders with renationalisation on the cheap, with damaging the interests of minority shareholders after a Government raid on a company and with separating ownership from control, which must mean taking away votes from shareholders as there can be no other explanation for that, with the suggestion that employees, trade unions, customers—an enormous group—should in many cases be ranked above shareholders and in some way be given votes just as the shareholders lose theirs and by sustaining the attack in saying that stakes must be bought in private sector companies. I can understand why, if companies are threatened with municipalised competition to provide subsidised undercutting of worthwhile businesses in the private sector; with the wish for public interest commissioners who would set investment programmes, control dividends and reduce the cash flow by lowering prices—all suggestions which are not only in the hon. Gentleman's book, but are part of the Labour policy review document. Companies will no doubt appeal to their shareholders to endorse their actions by not opposing them at annual general meetings.
It is a sign of the success of its policy that the Conservative party is still the main party that benefits from donations by companies. There is little trouble at AGMs because shareholders clearly and intuitively understand the need to support a party of private enterprise——

Mr. Allen: If company donations to the Conservative party are a sign of great faith in that party and a barometer of the approval of businesses for that party, can the hon. Gentleman explain why those donations are currently falling?

Mr. Redwood: Companies are particularly keen to offer donations at election times and I am sure that if a general election were in the offing, the hon. Gentleman would find that donations increased again. It concentrates the mind wonderfully. That is when people will understand that a party of free enterprise is needed to defend the interests of shareholders from the wild policies adduced in "The Future of Socialism".

Mr. Campbell-Savours: I spoke about the wider shareholder democracy in my brief speech. What about a shareholder in my constituency who has £500 worth of shares? If the annual general meeting is held in London and that person is at work, how can he influence the decisions taken there? The Government want people to invest, yet there may well be tens or even hundreds of thousands of shareholders in that position.

Mr. Redwood: Shareholders can go to the meeting, organise themselves, write to the chairman and express their views in a variety of ways short of going to the meeting. The hon. Gentleman knows how democracy works in the political sphere. The same is true within a company framework. The powers are contained in


company law. The responsibilities are on the shareholders, who exercise them if they see the need to do so. It is not that that is difficult, but that shareholders do not want to do it. That is what the hon. Gentleman cannot bear.

Mr. Campbell-Savours: The Minister has not grasped my point. The question is whether the shareholders are physically able to attend a meeting. What happens if a group of shareholders feels collectively that it wants to change a company's policy? How can it influence events? It may be that when there were few shareholders of companies——

Madam Deputy Speaker: Order.

Mr. Redwood: If a group of shareholders is worried about a matter, surely one of them who is retired or has a day off can attend the meeting, table a resolution and, if the right numbers are present, vote in the usual way. At company general meetings there are proxy systems and other ways of voting for a properly tabled resolution which is circulated with the general agenda.
The Labour Government put in place a fair law which we wish to operate sensibly and well. Shareholders are happy with the present system because they are worried by the policies of the Labour party and, in particular, those of the hon. Member for Dagenham. The powers are there and I, like many other hon. Members who have spoken, wish to see wider share ownership mean a true share-owning democracy. Present company law is more than adequate to do that. The only thing that would wreck it would be if I accepted any of the wild ideas adduced by the hon. Member for Dagenham. I hope that the House will vote against the new clause.

Mr. Gould: I confess to finding the Minister's first speech on the Bill disappointing in two respects. First, I assume that what I heard was the much-trailed, ferocious and blood-curdling attack that was to be made on me. [HON. MEMBERS: "Just wait."] It may well be that that attack is to be repeated, but I have a feeling that it will not bear repetition. From its present ineffectiveness it will become hardly effective in any respect. I had hoped for something more full-blooded and perhaps the Minister will try again for something better. In the meantime, to hon. Members who are encouraged by that ferocious onslaught to buy my book and to those who, like the hon. Member for Beaconsfield (Mr. Smith), have already done so, I immediately offer to autograph their copies and those of future proud possessors.

Mr. Redwood: I am delighted that jointly we can advertise the hon. Gentleman's book because it will do the Conservative cause so much good. The only thing that worries me is that if he offers too many autographed copies, their value will drop, so should my hon. Friends insist on buying their own copies and on not having them autographed?

Mr. Gould: Hon. Gentlemen have no option but to buy their own copies. The book will not be given away.
The second disappointment in the Minister's speech can be briefly expressed. Like all his hon. Friends, except the hon. Member for Aldridge-Brownhills (Mr. Shepherd), the Minister failed to understand the real purport of our proposal. Some of them understood it but chose not to reveal it. It may be that the Minister is as deficient in his

judgment of this point as he was in his estimation of the effect of a wide readership of my book. In this debate a division has emerged. Opposition Members believe that democracy, good practice and the public interest require that directors are obliged to obtain shareholders' approval in advance of giving money to political parties. By contrast, the Government offer the present position in which it is open to shareholders, if they are properly organised and informed and sufficiently motivated to turn up to an ordinary general meeting, to initiate a response to what has already been done. They are required to remonstrate with directors in retrospect. That is not an adequate expression of what democracy requires in that context.
On that basic point, we differ strongly from the Government who seem unable to comprehend what is at stake. It is because I find the Minister's response so disappointing and his comprehension so inadequate that we shall press the new clause to a Division.

Question put, That the clause be read a Second time:—

The House divided: Ayes 168, Noes 223.

Division No. 338]
[7.16 pm


AYES


Abbott, Ms Diane
Doran, Frank


Allen, Graham
Dunwoody, Hon Mrs Gwyneth


Anderson, Donald
Eadie, Alexander


Archer, Rt Hon Peter
Eastham, Ken


Armstrong, Hilary
Ewing, Harry (Falkirk E)


Ashley, Rt Hon Jack
Ewing, Mrs Margaret (Moray)


Ashton, Joe
Fatchett, Derek


Banks, Tony (Newham NW)
Fearn, Ronald


Barnes, Harry (Derbyshire NE)
Field, Frank (Birkenhead)


Barron, Kevin
Flannery, Martin


Battle, John
Flynn, Paul


Beckett, Margaret
Foot, Rt Hon Michael


Beith, A. J.
Foster, Derek


Bell, Stuart
Foulkes, George


Benn, Rt Hon Tony
Fyfe, Maria


Bennett, A. F. (D'nt'n &amp; R'dish)
Galloway, George


Bermingham, Gerald
Garrett, John (Norwich South)


Bidwell, Sydney
Garrett, Ted (Wallsend)


Blair, Tony
Gilbert, Rt Hon Dr John


Blunkett, David
Gordon, Mildred


Boyes, Roland
Gould, Bryan


Bradley, Keith
Griffiths, Nigel (Edinburgh S)


Brown, Gordon (D'mline E)
Griffiths, Win (Bridgend)


Brown, Ron (Edinburgh Leith)
Hardy, Peter


Bruce, Malcolm (Gordon)
Hattersley, Rt Hon Roy


Buchan, Norman
Heffer, Eric S.


Buckley, George J.
Hinchliffe, David


Campbell, Menzies (Fife NE)
Hoey, Ms Kate (Vauxhall)


Campbell, Ron (Blyth Valley)
Home Robertson, John


Campbell-Savours, D. N.
Howarth, George (Knowsley N)


Canavan, Dennis
Howells, Geraint


Carlile, Alex (Mont'g)
Howells, Dr. Kim (Pontypridd)


Clark, Dr David (S Shields)
Hughes, John (Coventry NE)


Clay, Bob
Hughes, Robert (Aberdeen N)


Clelland, David
Illsley, Eric


Clwyd, Mrs Ann
Ingram, Adam


Cohen, Harry
Janner, Greville


Cook, Robin (Livingston)
Johnston, Sir Russell


Corbett, Robin
Jones, Barry (Alyn &amp; Deeside)


Cousins, Jim
Jones, Ieuan (Ynys Môn)


Cox, Tom
Jones, Martyn (Clwyd S W)


Cummings, John
Kennedy, Charles


Cunliffe, Lawrence
Leadbitter, Ted


Cunningham, Dr John
Leighton, Ron


Darling, Alistair
Lewis, Terry


Davies, Rt Hon Denzil (Llanelli)
Litherland, Robert


Davies, Ron (Caerphilly)
Livingstone, Ken


Davis, Terry (B'ham Hodge H'l)
Livsey, Richard


Dewar, Donald
Lofthouse, Geoffrey


Dixon, Don
Loyden, Eddie


Dobson, Frank
McAllion, John






McAvoy, Thomas
Reid, Dr John


McCartney, Ian
Richardson, Jo


Macdonald, Calum A.
Robertson, George


McKelvey, William
Rogers, Allan


McLeish, Henry
Rooker, Jeff


Maclennan, Robert
Ross, Ernie (Dundee W)


McNamara, Kevin
Ruddock, Joan


Madden, Max
Sedgemore, Brian


Mahon, Mrs Alice
Sheerman, Barry


Marshall, Jim (Leicester S)
Sheldon, Rt Hon Robert


Martlew, Eric
Short, Clare


Meacher, Michael
Skinner, Dennis


Meale, Alan
Smith, Andrew (Oxford E)


Michael, Alun
Smith, C. (Isl'ton &amp; F'bury)


Michie, Bill (Sheffield Heeley)
Smith, J. P. (Vale of Glam)


Michie, Mrs Ray (Arg'l &amp; Bute)
Steinberg, Gerry


Moonie, Dr Lewis
Straw, Jack


Morgan, Rhodri
Taylor, Matthew (Truro)


Morley, Elliot
Thompson, Jack (Wansbeck)


Morris, Rt Hon A. (W'shawe)
Turner, Dennis


Mowlam, Marjorie
Vaz, Keith


Mullin, Chris
Wall, Pat


Oakes, Rt Hon Gordon
Wallace, James


O'Neill, Martin
Watson, Mike (Glasgow, C)


Orme, Rt Hon Stanley
Welsh, Andrew (Angus E)


Owen, Rt Hon Dr David
Welsh, Michael (Doncaster N)


Parry, Robert
Williams, Rt Hon Alan


Patchett, Terry
Wilson, Brian


Pike, Peter L.
Winnick, David


Powell, Ray (Ogmore)
Worthington, Tony


Prescott, John
Wray, Jimmy


Primarolo, Dawn



Quin, Ms Joyce
Tellers for the Ayes:


Radice, Giles
Mr. Frank Haynes and


Randall, Stuart
 Mrs. Llin Golding.




NOES


Aitken, Jonathan
Chapman, Sydney


Alexander, Richard
Chope, Christopher


Allason, Rupert
Clark, Dr Michael (Rochford)


Amess, David
Clark, Sir W. (Croydon S)


Amos, Alan
Clarke, Rt Hon K. (Rushcliffe)


Arbuthnot, James
Colvin, Michael


Ashby, David
Coombs, Anthony (Wyre F'rest)


Atkinson, David
Coombs, Simon (Swindon)


Baker, Nicholas (Dorset N)
Couchman, James


Baldry, Tony
Cran, James


Banks, Robert (Harrogate)
Currie, Mrs Edwina


Batiste, Spencer
Curry, David


Bellingham, Henry
Davies, Q. (Stamf'd &amp; Spald'g)


Bendall, Vivian
Davis, David (Boothferry)


Bennett, Nicholas (Pembroke)
Day, Stephen


Benyon, W.
Dicks, Terry


Biffen, Rt Hon John
Douglas-Hamilton, Lord James


Blackburn, Dr John G.
Dover, Den


Blaker, Rt Hon Sir Peter
Dunn, Bob


Body, Sir Richard
Durant, Tony


Bonsor, Sir Nicholas
Evans, David (Welwyn Hatf'd)


Boscawen, Hon Robert
Evennett, David


Boswell, Tim
Fallon, Michael


Bottomley, Mrs Virginia
Favell, Tony


Bowden, Gerald (Dulwich)
Fenner, Dame Peggy


Bowis, John
Field, Barry (Isle of Wight)


Boyson, Rt Hon Dr Sir Rhodes
Fishburn, John Dudley


Brandon-Bravo, Martin
Fookes, Dame Janet


Brazier, Julian
Forman, Nigel


Brown, Michael (Brigg &amp; Cl't's)
Forsyth, Michael (Stirling)


Bruce, Ian (Dorset South)
Forth, Eric


Buck, Sir Antony
Fowler, Rt Hon Norman


Burns, Simon
Fox, Sir Marcus


Butcher, John
French, Douglas


Butler, Chris
Gale, Roger


Butterfill, John
Gardiner, George


Carlisle, John, (Luton N)
Garel-Jones, Tristan


Carlisle, Kenneth (Lincoln)
Glyn, Dr Alan


Carrington, Matthew
Goodhart, Sir Philip


Carttiss, Michael
Goodlad, Alastair


Cash, William
Goodson-Wickes, Dr Charles


Chalker, Rt Hon Mrs Lynda
Gow, Ian


Channon, Rt Hon Paul
Grant, Sir Anthony (CambsSW)





Greenway, Harry (Baling N)
Norris, Steve


Griffiths, Peter (Portsmouth N)
Onslow, Rt Hon Cranley


Ground, Patrick
Paice, James


Grylls, Michael
Patnick, Irvine


Gummer, Rt Hon John Selwyn
Pawsey, James


Hague, William
Peacock, Mrs Elizabeth


Hanley, Jeremy
Porter, David (Waveney)


Hannam, John
Powell, William (Corby)


Harris, David
Redwood, John


Haselhurst, Alan
Riddick, Graham


Hayhoe, Rt Hon Sir Barney
Ridley, Rt Hon Nicholas


Hayward, Robert
Ridsdale, Sir Julian


Heathcoat-Amory, David
Roberts, Wyn (Conwy)


Heddle, John
Rossi, Sir Hugh


Hicks, Mrs Maureen (Wolv' NE)
Rost, Peter


Higgins, Rt Hon Terence L.
Rumbold, Mrs Angela


Hind, Kenneth
Sainsbury, Hon Tim


Hogg, Hon Douglas (Gr'th'm)
Shaw, David (Dover)


Hordern, Sir Peter
Shaw, Sir Giles (Pudsey)


Howard, Michael
Shephard, Mrs G. (Norfolk SW)


Howarth, G. (Cannock &amp; B'wd)
Shersby, Michael


Howe, Rt Hon Sir Geoffrey
Sims, Roger


Hughes, Robert G. (Harrow W)
Smith, Sir Dudley (Warwick)


Hunt, David (Wirral W)
Smith, Tim (Beaconsfield)


Hunt, Sir John (Ravensbourne)
Soames, Hon Nicholas


Hunter, Andrew
Speller, Tony


Irvine, Michael
Spicer, Sir Jim (Dorset W)


Jack, Michael
Spicer, Michael (S Worcs)


Jackson, Robert
Stanbrook, Ivor


Janman, Tim
Stanley, Rt Hon Sir John


Jessel, Toby
Steen, Anthony


Jones, Gwilym (Cardiff N)
Stevens, Lewis


Kellett-Bowman, Dame Elaine
Stewart, Andy (Sherwood)


Key, Robert
Stokes, Sir John


Kilfedder, James
Stradling Thomas, Sir John


Kirkhope, Timothy
Sumberg, David


Knapman, Roger
Summerson, Hugo


Knight, Greg (Derby North)
Taylor, John M (Solihull)


Knight, Dame Jill (Edgbaston)
Taylor, Teddy (S'end E)


Knox, David
Thompson, D. (Calder Valley)


Lang, Ian
Thompson, Patrick (Norwich N)


Latham, Michael
Thorne, Neil


Lawson, Rt Hon Nigel
Thornton, Malcolm


Leigh, Edward (Gainsbor'gh)
Thurnham, Peter


Lester, Jim (Broxtowe)
Townend, John (Bridlington)


Lilley, Peter
Townsend, Cyril D. (B'heath)


Lord, Michael
Tracey, Richard


Lyell, Sir Nicholas
Twinn, Dr Ian


Macfarlane, Sir Neil
Waddington, Rt Hon David


MacGregor, Rt Hon John
Wakeham, Rt Hon John


MacKay, Andrew (E Berkshire)
Waldegrave, Hon William


Maclean, David
Walker, Bill (T'side North)


McLoughlin, Patrick
Walters, Sir Dennis


McNair-Wilson, Sir Michael
Ward, John


Madel, David
Wardle, Charles (Bexhill)


Mans, Keith
Warren, Kenneth


Maples, John
Watts, John


Marland, Paul
Wheeler, John


Marshall, John (Hendon S)
Whitney, Ray


Marshall, Michael (Arundel)
Widdecombe, Ann


Martin, David (Portsmouth S)
Wiggin, Jerry


Maxwell-Hyslop, Robin
Winterton, Mrs Ann


Meyer, Sir Anthony
Winterton, Nicholas


Mills, Iain
Wolfson, Mark


Miscampbell, Norman
Wood, Timothy


Morrison, Sir Charles
Young, Sir George (Acton)


Neale, Gerrard



Nelson, Anthony
Tellers for the Noes:


Nicholson, David (Taunton)
Mr. Tom Sackville and


Nicholson, Emma (Devon West)
Mr. Stephen Dorrell.

Question accordingly negatived.

New Clause 3

DISCLOSURE CONCERNING POLLUTION CONTROL POLICY

'(1) Paragraph 6 of Schedule 7 to the Companies Act 1985 (Miscellaneous) shall be amended as follows—

(2) At end insert—

"(d) an indication of the company's policy regarding pollution control and particulars of any fines or other penalties, if any, incurred by the company in respect of breaches of the Public Health Acts 1936 and 1961, of the Clean Air Acts 1956 and 1968, of the Health and Safety at Work Etc. Act 1974 and of the Control of Pollution Act 1974.".'—[Mr. John Garrett.]

Brought up, and read the First time.

Mr. John Garrett: I beg to move, That the clause be read a Second time.
The aim of new clause 3 is simply to give prominence to the urgent need for pollution control by companies, and to make them more accountable for any environmental pollution that they cause. It would oblige companies to have a written statement of their environmental policies, and to disclose breaches of environmental statutes and particulars of any judgments against them for having broken pollution control law. I am pleased that the Government are moving in our direction and I hope that the Minister will see fit to accept new clause 3.
On 1 September, an article in The Guardian stated that the Government proposed
New rights of access for the public to information about companies breaching pollution control laws".
We seek to extend access to such information to shareholders and potential investors. If the Government feel that they should legislate to inform the public about pollution by companies, I am sure that it will follow automatically that they are in favour of informing shareholders and investors.
7.30 pm
The article continued:
The Department of the Environment announced that it would be introducing urgent legislation requiring registers to be drawn up on companies involved in both industrial and air pollution…Her Majesty's Inspectorate of Pollution…and local authorities are to be required by law to establish public registers giving details of the issue of licences to companies, the track record of the compliance of companies with the terms of their licence and any details of the failure by companies to comply, including a court action.
That is exactly what we are proposing in the new clause which suggests that that information shall be in the company's annual report.
The article went on:
This kind of information is seen by green groups as vitally important if they are able to bring public pressure on companies which pollute.
Of course, we want to see the results of the consultation,
but, if the Government honour their obligation, that proposal seems to us to be a step in the right direction. If implemented, the proposal would inform a local community of the record of companies in regard to pollution locally. We seek to give the same information to shareholders, many thousands of whom nowadays are strongly conscious of environmental issues.
Since this issue was discussed in Committee progress has been made in that the CBI has had an interesting change of heart. The March CBI News contained a frosty reception for the EC directive on public disclosure of information by companies on the environmental effects of their activities. The CBI graciously said that it fully agreed with the idea that the public should be given adequate information to allow them to be confident that their environment was being properly protected. However, it said that any new legislation should not go beyond what the public "needs to know", which may be costly or

burdensome to provide. It said that legislation also should not prejudice the voluntary flow of information from the controlled to the controller. That was hardly a position of openness on environmental matters.
At that time, the CBI disagreed with the EC directive stating that companies should disclose the environmental effects of their policies and the extent to which they might pollute. However, by the October CBI News, the CBI had launched a "major new environmental initiative", an "action plan" called "Environment Means Business" and an environment management unit had been set up to work alongside the CBI's environment policy group. Warning "environmentally apathetic industries", the CBI's plan included the aim that businesses should have environmental improvement objectives, which is what we propose in the new clause, and should promote environmental performance and a high, sustainable reputation for environmental excellence. If the CBI believes that, it would not disagree that individual companies should disclose their performance in this regard. The Government should also welcome such a step. At present, we are in agreement with the CBI.
In May, the DTI launched a campaign to alert companies to environmental challenges and opportunities, and warned companies of tougher environmental controls.
Our intention in new clause 3 is to enable shareholders to be informed and companies to be more easily accountable to their shareholders on environmental matters. There is a growing concern among shareholders about environmental issues. As the Minister said in an earlier speech, there are now a number of investment trusts that invest only in companies that are environmentally sound. Ethical investment is growing rapidly and now accounts for more than 10 per cent. of the stock traded on Wall street.
Throughout the western world there is a realisation that companies must be publicly accountable for their activities that may endanger the environment. Institutional investors are also taking a stronger line on environmental issues with the companies in which they invest. In my constituency, Norwich Union is requiring information from its invested companies on what steps they are taking to control pollution. In particular, the investment management of the Norwich Union wrote to ICI asking for details on its 40 breaches of pollution control laws last year on the discharge of effluent.
As I said in Committee, some of the worst industrial pollution in Britain is committed by household names that pride themselves on their openness to their shareholders and the informativeness of their annual reports. They include ICI, Coalite and the Rio Tinto-Zinc subsidiary Staveley Industries which grossly pollutes the River Rother, and 'Coats Viyella which regularly discharges pollutants into the River Goyt. Express Foods group, a subsidiary of Grand Metropolitan, has been convicted 25 times in the past six years for discharging pollutants. Shareholders should know about that, as it might influence their investment decisions. There is no reason why Grand Metropolitan should conceal it. British Petroleum, a company which boasts of its green credentials, British Tissues, British Gas and many others frequently breach discharge limits. Prosecutions are few and not particularly onerous for the polluting company. It is cheaper for a company to pollute and pay a fine if it is caught than to install equipment to clean up the


environment. The fines for pollution are very low with a maximum penalty of £2,000, whereas in the United States the fine is $25,000 per day.
We ask that companies should set out their environmental policies and state what they are doing to produce environmentally sound products and operate environmentally sound processes. In West Germany, company chairmen usually devote part of their annual reports to what the company has done to clear up the environment.
The pollution control legislation to which we refer in new clause 3 is pretty comprehensive. The Public Health Act 1936 covers a wide range of statutory nuisances, including the state of premises, dust and effluent discharges and waste accumulation. The Public Health Act 1961 covers the discharge of trade effluents. The Control of Pollution Act 1974 covers waste disposal, and the Clean Air Acts deal with atmospheric pollution. If the new clause were enacted, any shareholder would know a company's policy and record on environmental pollution. The new clause goes with the grain of public and shareholder concern.
As we know from our own constituencies, more and more people throughout the country are concerned about the polluting activities of companies. They want them controlled or stopped, and they want those companies to be publicly accountable for what they discharge.
When we raised this issue in Committee as part of a series of amendments concerned with disclosure to shareholders, we were accused of jumping on a bandwagon. I understand that since then we have been joined on that bandwagon by the Government. The control of pollution is much more than a bandwagon; it is a concern widely and deeply felt by many people. The new clause improves just a little the accountability of companies in a very important area of public policy.

Mr. Redwood: I am grateful to the hon. Member for Norwich, South (Mr. Garrett) for his remarks about the search for an adequate pollution control system. I am sure that all hon. Members agree with him. There must be adequate control of pollution, and information must be available to ensure that that occurs. I accept that laws are necessary to identify certain Acts as pollution control Acts. There must be a register of information so that the public are aware of what is happening, and a clear enforcement mechanism.
A range of laws already govern a wide variety of pollution issues, some of which were mentioned by the hon. Member for Norwich, South and are mentioned in the new clause. Additional legislation may be necessary. The Government are always reviewing the adequacy of pollution laws, and will bring forward whatever measures are necessary to ensure that the laws are strong, clear and meet the clear requirement of people for adequate and strong protection against hazardous and other types of pollution.
The Control of Pollution Act 1974 provided for registers to be available for public inspection. We need new registers to cover integrated pollution control, local authority air pollution control, and so on. The Government will be working on proposals for such new registers over the next few months.
The new clause should be withdrawn because it would clash with the idea of a register open for public inspection, and because there are other problems with it. For example, it does not cover all the laws that should be mentioned, such as the Alkali etc., Works Regulation Act 1906. It is selective, although the laws chosen are some of the most general and well known on pollution legislation.
The purpose of companies' reports and accounts is to inform shareholders, investors and creditors. They are not generally available to the public, unless people go to considerable lengths to request them. The information suggested in the new clause would be an overburden on accounts, which primarily have a financial purpose.

Mr. Campbell-Savours: I am sorry to intrude, but I was not on the Committee that considered the Bill and was therefore unable to follow the debate. The Minister referred to a register. Will he say what is implied in that and how it would work?

Mr. Redwood: The register would be maintained by the relevant pollution control authority and would be available for public inspection. The proposal in the new clause would be less satisfactory, because fewer people would have access, it would be more difficult to gain access and it would clash with the idea of using registers as the buttress to pollution control legislation.
I urge the hon. Member for Norwich, South to withdraw the new clause and to see the Government's proposals in the wider context of the general policies on the control of pollution.

Mr. Campbell-Savours: I shall intervene only briefly because I did not attend prepared to speak this evening. However, a number of the amendments and new clauses invite comment, of which this is one.
I shall be reasonable, as I was in the debate on new clause 1, and press the Minister a little more about the register. As I understand it, he suggested that anyone who applied to the pollution inspectorate could be informed of judgments made against a company that had offended and been penalised.

Mr. Redwood: The Control of Pollution Act provides for the maintenance of registers, which contain information such as details of consents issued under the Act and effluent samples. If we develop the register approach more generally, it will have to be decided what should be recorded in the registers. I am urging the House to agree to public inspection registers rather than to try to include matters in company accounts—which are shown to a much more selective audience—that would be an unnecessary burden on financial statements.

Mr. Campbell-Savours: I shall develop the use of the term "selective audience" in the course of my argument.
If a company is found guilty of breaching the regulations, to what extent is that information communicated to the people who are in a position to influence that company's future policy? If a company breaches the regulations in the Minister's constituency or in mine, the breach and the damage to the environment would be reported within the locality by the local newspaper. Within the vicinity of the plant there may be a controversial debate about the nature of the pollution, its damage to the environment and the upset that it caused local people. It


may develop into a mature debate, with letters being written to the editor, editorial comment, articles being written by interested journalists and perhaps television programmes or magazine articles. That debate may be localised in a particular area. I live in Cumbria, and my constituency is in Cumbria. The debate that would arise following an incident and a prosecution may be confined to the area. Border Television does not transmit to London, where the annual general meeting of the company concerned may be taking place. The body of shareholders—we know that the majority of shareholders are based in the south-east—may not see that television programme or the local newspaper comment and may be unaware of the problem in the locality. They are therefore not informed, in so far as information about a prosecution or breach has not been communicated to them.
Will the information on the registers proposed by the Government, in addition to the information that arises from the debate in the locality, be communicated to people who attend the company's annual general meeting, who might be able to exert pressure on the directors of the company? It is unlikely that shareholders in a large company such as ICI will find out from the pollution inspectorate the nature of any prosecution and what penalty was paid, because they have other things on their mind. Institutional shareholders are too concerned with the general conduct of their affairs to preoccupy themselves with the business of investing. It may be that because information about a breach is not available from the register, and because knowledge of the breach is confined to the region, there will be no debate at the company's annual general meeting.
The new clause proposes a route whereby information can be communicated about an incident to people who are in a position to exert pressure on a company to secure change. That is crucial, and anything that restricts that flow of information is unnecessary, unreasonable and not what the public want.
The Minister has been generous in suggesting that there may be a way forward, but there is a better way forward. If the drafting of the new clause is not acceptable today, I hope that in the future the Minister will bring forward a similar proposal. I argue that because I believe that the public want it. When I say that information is not communicated, anyone observing today's debate will know that that is the truth.
If the Minister were to argue a case against a resolution, he should be prepared to provide examples of occasions on which shareholders set out to establish the environmental track record of their investment and when they referred to it at annual general meetings. If the Minister is not in a position to do that, in many ways he directs the House to support an amendment which ensures that the debate is on the agenda of the very group of people—apart from the board of directors, who are obviously involved—who are in a position to influence events. I thank the Minister for his generous response, but he should go further and not necessarily write off the new clause. It is not dangerous; it is moderate and sensible.
Furthermore, if shareholders were aware of regular breach and abuse of regulation in companies in which they have made investments, in light of the developing debate on environmental protection, they would be likely to exert an influence, if only behind the scenes, to ensure that offences did not take place. I am thinking of a particular company to which I do not want to refer this evening.

However, there are major polluters in the county of Cumbria. I should like to think that shareholders would want to raise these issues. Perhaps the only way that they can be drawn to the attention of shareholders is by the approach that has been adopted by my hon. Friend the Member for Norwich, South (Mr. Garrett) as against the Minister's approach.

Mr. John Garrett: I was deeply disappointed by the Minister's reply. He completely misunderstood the purpose of the new clause. It is complementary to the local register of polluters. It does not displace it in any way, nor is the purpose of the new clause met by a local register of companies which pollute. The local register will tell the local community that it has within it companies that pollute the environment, whereas the annual accounts will tell the owners of the company that they are investing in a company that has a bad record on pollution or no policy for protection of the environment.
Although it is true that not everyone sees accounts, shareholders see company accounts. That is the point of the new clause. It is aimed at informing shareholders of what their companies are up to. Unfortunately, the Minister was not present in Committee, but his colleague the Under-Secretary of State was present, and we enjoyed his participation. His colleague will know that we tabled several amendments about energy use by companies, research and development, employment of the disabled and so on to improve the public accountability—the shareholder accountability—of companies. That is in the broadstream of endeavour on our part. Part of a company's accountability is that it should account to its shareholders for its environmental policies and should own up to its shareholders when it has been successfully prosecuted.
The other argument for our new clause is that it would focus the attention of boards of directors on environmental matters. It would make them think about the issue because they would be expected to state in their annual report, directors' report, or chairman's report their aims and objectives for the environmental impact of their companies' products and processes. That would make them reduce effluent because they would be shamed into doing so if, year after year, they had to own up to polluting a local river, for example.
Although the list of environmental legislation in our new clause may not be comprehensive, as the Minister said, it is a good start. The Government will not hit polluting companies hard enough. They should be exposed, made accountable in public, and made accountable to their shareholders for their polluting activities. Therefore, I intend to ask my right hon. and hon. Friends to support the new clause.

Mr. Kennedy: I wish to speak for no more than one minute. I shall support the hon. Member for Norwich, South (Mr. Garrett) when he calls a Division. I underscore the point that was made by the hon. Member for Workington (Mr. Campbell-Savours). The psychology of many annual general meetings—they are generally in the south-east if not central London—becomes all the more pronounced the further north and far-flung one moves. I can think of examples in the Highlands and Islands of Scotland. I suspect that, if some major shareholders are more conscious of damage or potential damage, they might want to do something about it.

The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Eric Forth): The hon. Gentleman's minute is up.

Mr. Kennedy: Not for the first time, I will disappoint the Minister by not being true to my word.
Environmental issues now occupy a higher position on political agendas and in company reports. Companies are spending considerable sums telling us about what they are doing to be environmentally conscious and to reduce emissions, toxic wastes, pollution and so on. Through propaganda and public relations they recognise the importance of doing that, and have acted accordingly.
We should also recognise the other side of the equation—the embarrassment and awkwardness for a company if, along with providing information about its profits, losses, investments, developments and so on, it must make explicit its shortcomings in its pollution track record. The eagerness of companies rightly to demonstrate their environmental consciousness is a further justification for pointing out the potential disincentive of possible pollutant activities. The new clause makes eminent good sense.
I hope that, even if the Minister will not accept the specific wording of the new clause, we shall be able to get a commitment that the Government and the Department of Trade and Industry will try to take steps in this necessary direction, which is clearly a salient political and long-term issue, irrespective of our political viewpoint.

Question put, That the clause be read a Second time:—

The House divided: Ayes 144, Noes 193.

Division No. 339]
[7.58 pm


AYES


Abbott, Ms Diane
Davies, Ron (Caerphilly)


Allen, Graham
Davis, Terry (B'ham Hodge H'l)


Anderson, Donald
Dewar, Donald


Archer, Rt Hon Peter
Dixon, Don


Armstrong, Hilary
Dobson, Frank


Ashley, Rt Hon Jack
Doran, Frank


Ashton, Joe
Dunwoody, Hon Mrs Gwyneth


Barnes, Harry (Derbyshire NE)
Eadie, Alexander


Barron, Kevin
Eastham, Ken


Battle, John
Ewing, Harry (Falkirk E)


Beckett, Margaret
Ewing, Mrs Margaret (Moray)


Benn, Rt Hon Tony
Fatchett, Derek


Bennett, A. F. (D'nt'n &amp; R'dish)
Fearn, Ronald


Bermingham, Gerald
Flannery, Martin


Bidwell, Sydney
Flynn, Paul


Blunkett, David
Fyfe, Maria


Boyes, Roland
Galloway, George


Bradley, Keith
Garrett, John (Norwich South)


Brown, Gordon (D'mline E)
Garrett, Ted (Wallsend)


Brown, Nicholas (Newcastle E)
Gilbert, Rt Hon Dr John


Bruce, Malcolm (Gordon)
Golding, Mrs Llin


Buchan, Norman
Gordon, Mildred


Buckley, George J.
Gould, Bryan


Campbell, Menzies (Fife NE)
Griffiths, Win (Bridgend)


Campbell, Ron (Blyth Valley)
Hardy, Peter


Campbell-Savours, D. N.
Heffer, Eric S.


Canavan, Dennis
Hinchliffe, David


Carlile, Alex (Mont'g)
Home Robertson, John


Clark, Dr David (S Shields)
Howarth, George (Knowsley N)


Clay, Bob
Howells, Geraint


Clelland, David
Howells, Dr. Kim (Pontypridd)


Clwyd, Mrs Ann
Hughes, John (Coventry NE)


Cohen, Harry
Hughes, Robert (Aberdeen N)


Cook, Robin (Livingston)
Illsley, Eric


Corbett, Robin
Ingram, Adam


Cousins, Jim
Jones, Barry (Alyn &amp; Deeside)


Cummings, John
Jones, Martyn (Clwyd S W)


Cunliffe, Lawrence
Kennedy, Charles


Darling, Alistair
Leadbitter, Ted





Leighton, Ron
Quin, Ms Joyce


Litherland, Robert
Radice, Giles


Livingstone, Ken
Randall, Stuart


Livsey, Richard
Reid, Dr John


Lofthouse, Geoffrey
Richardson, Jo


Loyden, Eddie
Rooker, Jeff


McAllion, John
Ross, Ernie (Dundee W)


McAvoy, Thomas
Ruddock, Joan


McCartney, Ian
Salmond, Alex


Macdonald, Calum A.
Sedgemore, Brian


McKelvey, William
Sheerman, Barry


McLeish, Henry
Short, Clare


Maclennan, Robert
Skinner, Dennis


McNamara, Kevin
Smith, Andrew (Oxford E)


Madden, Max
Smith, C. (Isl'ton &amp; F'bury)


Mahon, Mrs Alice
Smith, Rt Hon J. (Monk'ds E)


Marek, Dr John
Smith, J. P. (Vale of Glam)


Marshall, Jim (Leicester S)
Steinberg, Gerry


Martlew, Eric
Taylor, Matthew (Truro)


Meacher, Michael
Thompson, Jack (Wansbeck)


Meale, Alan
Turner, Dennis


Michael, Alun
Vaz, Keith


Michie, Bill (Sheffield Heeley)
Wallace, James


Michie, Mrs Ray (Arg'l &amp; Bute)
Watson, Mike (Glasgow, C)


Moonie, Dr Lewis
Welsh, Andrew (Angus E)


Morgan, Rhodri
Welsh, Michael (Doncaster N)


Morley, Elliot
Williams, Rt Hon Alan


Mowlam, Marjorie
Wilson, Brian


Mullin, Chris
Winnick, David


Oakes, Rt Hon Gordon
Worthington, Tony


Parry, Robert
Wray, Jimmy


Patchett, Terry



Pike, Peter L.
Tellers for the Ayes:


Prescott, John
Mr. Frank Haynes and


Primarolo, Dawn
Mr. Nigel Griffiths.




NOES


Aitken, Jonathan
Cormack, Patrick


Alexander, Richard
Couchman, James


Alison, Rt Hon Michael
Cran, James


Allason, Rupert
Currie, Mrs Edwina


Amess, David
Curry, David


Amos, Alan
Davies, Q. (Stamf'd &amp; Spald'g)


Arbuthnot, James
Davis, David (Boothferry)


Ashby, David
Day, Stephen


Atkins, Robert
Dicks, Terry


Atkinson, David
Dorrell, Stephen


Baker, Nicholas (Dorset N)
Douglas-Hamilton, Lord James


Baldry, Tony
Dover, Den


Batiste, Spencer
Dunn, Bob


Bennett, Nicholas (Pembroke)
Durant, Tony


Benyon, W.
Evans, David (Welwyn Hatf'd)


Blackburn, Dr John G.
Evennett, David


Blaker, Rt Hon Sir Peter
Fallon, Michael


Bonsor, Sir Nicholas
Favell, Tony


Boscawen, Hon Robert
Fenner, Dame Peggy


Boswell, Tim
Field, Barry (Isle of Wight)


Bowis, John
Fishburn, John Dudley


Boyson, Rt Hon Dr Sir Rhodes
Fookes, Dame Janet


Brandon-Bravo, Martin
Forman, Nigel


Brazier, Julian
Forsyth, Michael (Stirling)


Brown, Michael (Brigg &amp; Cl't's)
Forth, Eric


Bruce, Ian (Dorset South)
Fowler, Rt Hon Norman


Buck, Sir Antony
Fox, Sir Marcus


Burns, Simon
French, Douglas


Butcher, John
Gale, Roger


Butler, Chris
Gardiner, George


Butterfill, John
Garel-Jones, Tristan


Carlisle, John, (Luton N)
Glyn, Dr Alan


Carlisle, Kenneth (Lincoln)
Goodlad, Alastair


Carrington, Matthew
Goodson-Wickes, Dr Charles


Carttiss, Michael
Grant, Sir Anthony (CambsSW)


Cash, William
Greenway, Harry (Ealing N)


Chalker, Rt Hon Mrs Lynda
Griffiths, Peter (Portsmouth N)


Chapman, Sydney
Ground, Patrick


Chope, Christopher
Gummer, Rt Hon John Selwyn


Clark, Sir W. (Croydon S)
Hague, William


Colvin, Michael
Hampson, Dr Keith


Coombs, Anthony (Wyre F'rest)
Hanley, Jeremy


Coombs, Simon (Swindon)
Hannam, John






Harris, David
Peacock, Mrs Elizabeth


Haselhurst, Alan
Porter, David (Waveney)


Hayward, Robert
Powell, William (Corby)


Heathcoat-Amory, David
Redwood, John


Hicks, Mrs Maureen (Wolv' NE)
Riddick, Graham


Higgins, Rt Hon Terence L.
Ridsdale, Sir Julian


Hind, Kenneth
Rossi, Sir Hugh


Howard, Michael
Rost, Peter


Howe, Rt Hon Sir Geoffrey
Sainsbury, Hon Tim


Hunt, David (Wirral W)
Shaw, David (Dover)


Hunt, Sir John (Ravensbourne)
Shaw, Sir Giles (Pudsey)


Hunter, Andrew
Shephard, Mrs G. (Norfolk SW)


Irvine, Michael
Shepherd, Richard (Aldridge)


Jack, Michael
Shersby, Michael


Jackson, Robert
Smith, Sir Dudley (Warwick)


Janman, Tim
Smith, Tim (Beaconsfield)


Jessel, Toby
Soames, Hon Nicholas


Jones, Gwilym (Cardiff N)
Speller, Tony


Kellett-Bowman, Dame Elaine
Spicer, Michael (S Worcs)


Key, Robert
Stanbrook, Ivor


Kilfedder, James
Stanley, Rt Hon Sir John


Knapman, Roger
Steen, Anthony


Knight, Greg (Derby North)
Stevens, Lewis


Knight, Dame Jill (Edgbaston)
Stewart, Andy (Sherwood)


Knowles, Michael
Stradling Thomas, Sir John


Knox, David
Sumberg, David


Lang, Ian
Summerson, Hugo


Latham, Michael
Taylor, Teddy (S'end E)


Leigh, Edward (Gainsbor'gh)
Thompson, D. (Calder Valley)


Lester, Jim (Broxtowe)
Thompson, Patrick (Norwich N)


Lord, Michael
Thorne, Neil


Lyell, Sir Nicholas
Thurnham, Peter


Macfarlane, Sir Neil
Townend, John (Bridlington)


MacGregor, Rt Hon John
Townsend, Cyril D. (B'heath)


MacKay, Andrew (E Berkshire)
Tracey, Richard


McLoughlin, Patrick
Twinn, Dr Ian


McNair-Wilson, Sir Michael
Waddington, Rt Hon David


Madel, David
Wakeham, Rt Hon John


Malins, Humfrey
Walker, Bill (T'side North)


Maples, John
Walters, Sir Dennis


Marland, Paul
Ward, John


Marshall, John (Hendon S)
Wardle, Charles (Bexhill)


Martin, David (Portsmouth S)
Watts, John


Maxwell-Hyslop, Robin
Wheeler, John


Meyer, Sir Anthony
Whitney, Ray


Mills, Iain
Widdecombe, Ann


Miscampbell, Norman
Wiggin, Jerry


Morrison, Sir Charles
Winterton, Mrs Ann


Nelson, Anthony
Winterton, Nicholas


Nicholls, Patrick
Wolfson, Mark


Nicholson, David (Taunton)
Wood, Timothy


Nicholson, Emma (Devon West)



Norris, Steve
Tellers for the Noes:


Paice, James
Mr. John M. Taylor and Mr. Tom Sackville.


Patnick, Irvine



Pawsey, James

Question accordingly negatived.

New Clause 4

DIRECTORS' REPORTS

'.—(1) The directors' report of a public company laid before the company in general meeting after 31st December 1989 (not being a meeting adjourned from a date before that date) shall state, in addition to the matters required by Schedule 7 to the Companies Act 1985 (matters to be dealt with in directors' report), which, if any, of the directors at the end of relevant financial year were independent directors.

(2) The directors' report of a major public company laid before the company in general meeting after 31st December 1989 (not being a meeting adjourned from a date before that date) shall state, in addition to the matters required by subsection (1) above and by Schedule 7 to the Companies Act 1985 (matters to be dealt with in directors' report), if at the end of the relevant financial year fewer than three of the directors were independent directors, whether the directors propose that appointments of independent directors should he made.'.—[Mr. John Garrett.]

Brought up, and read the First time.

Mr. John Garrett: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Sir Paul Dean): With this it will be convenient to discuss the following: new clause 5—Interpretation—

'. In this Part—
associate" and "associated company" have the meaning given by section 435 of the Insolvency Act 1986;
audit committee" means a committee of the directors of a major public company appointed in accordance with the provisions of this Act;
directors' report" has the meaning given by section 235 of the Companies Act 1985;
financial year" has the meaning given by section 224 of the Companies Act 1985;
independent director" means a director who is not and in the previous five years has not been—
(a) an employee or the holder of any office (other than his office as independent director) or place of profit under the company.
(b) an associate of any director or officer of the company.
(c) an adviser retained by the company, or an associate or partner of such an adviser,
(d) a person or an associate of a person who has a notifiable interest in the company for purposes of Part VI of the Companies Act 1985, or
(e) a party to or otherwise materially interested in a substantial transaction or arrangement with the company;
and in paragraphs (a) to (e) above, "company" includes any holding, subsidiary or associated company of the company;
major public company" means on any date a public company of which any issued share capital is listed on a recognised investment exchange as defined by the Financial Services Act 1986 and which in one or more of the three financial years ending on the last day of the financial year of the company immediately preceding that date satisfied two or more of the following conditions—
(a) the amount of the turnover of the company and its subsidiaries exceeded £200 million;
(b) the balance sheet total (as defined in section 248(3) of the Companies Act 1985) of the company and its subsidiaries exceeded £100 million;
(c) the average number of full-time employees of the company and its subsidiaries determined on a weekly basis in accordance with section 248(4) of the Companies Act 1985 exceeded two thousand.'.

New clause 6—Appointment of Audit Committee—

'.—(1) Every notice calling an annual general meeting of a major public company to be held after 31st December 1989 (not being a meeting adjourned from a date before that date) shall, if no audit committee of the directors has been appointed in accordance with the provisions of this Act or if the appointment of such a committee has lapsed, include consideration of the appointment of an audit committee as a separate item of business to be transacted at that meeting.

(2) A major public company may by ordinary resolution require the directors to appoint an audit committee of the directors in accordance with the provisions of this Act notwithstanding any provision to the contrary or the absence of any necessary provision in the articles of the company.

(3) Where a major public company has resolved under the provisions of this Act to require the directors to appoint an audit committee, it shall be the duty of the directors of the company to make such an appointment within a period not exceeding six months after the date of the resolution.

(4) Subject to section 3 below, the conduct, the powers, duties and proceedings of an audit committee shall be governed by such regulations as the company may from time


to time adopt by ordinary resolution and such regulations shall be part of the regulations of the company in the same manner and to the same extent as if they were regulations contained in duly adopted articles of association.

(5) Section 380 of the Companies Act 1985 (registration etc, of resolutions and agreements) shall apply to any resolution passed by a major public company in accordance with the provisions of this section.'.

New clause 7—Duties of Audit Committee—

'. The duties of an audit committee shall include the following—
(a) to hold meetings with the auditors to consider any matters concerning the company of which notice has been given to the audit committee by the auditors and to report to the directors thereon; and
(b) to report to the directors on any other matter which in the opinion of the audit committee requires the attention of the directors.'.

Mr. Garrett: New clauses 4 and 5 relate to companies having non-executive or independent directors, and new clauses 6 and 7 relate to the formation of those independent directors into audit committees.
New clauses 4 and 5 represent a simple amendment in the tradition of something that goes back more than 10 years as the House has attempted to encourage public companies to appoint independent directors. I know that the late Sir Brandon Rhys Williams campaigned for this and that the hon. Member for Beaconsfield (Mr. Smith) moved the clauses relating to this in Committee. They advocated the appointment of such directors for many years. We think that it is right that that issue should be aired in this Bill at least one more time so that Conservative Members can join with us in trying to get this change through.
This issue has been current for a long time and, as proof, I have an article with me written by the late Sir Brandon Rhys Williams which appeared in the Investors Chronicle on 17 February 1978 entitled "Why companies need audit committees". At that time, Sir Brandon was making one of his numerous attempts to get such provisions enacted in company law.
New clause 4 requires a statement by a company as to whether it has independent directors and requires the directors' report of a major public company with fewer than three independent directors to state
whether the directors propose that appointments of independent directors—
or more independent directors—
should be made.
New clause 5 defines the companies to which that provision will apply as a major public company that satisfies three simple conditions—it has a turnover of more than £200 million, a balance sheet total of £100 million or over, and employs more than 2,000 people.
Sir Brandon's last act before his death was to introduce a Bill to this effect, which was passed unopposed on its Third Reading in the House, but which was regrettably blocked in another place by a hysterical campaign conducted by the Confederation of British Industry. At the time, I believed that that campaign was grossly over the top in its reaction to the threat to companies' independence and powers to carry out their proper duties by virtue of having the independent directors proposed by Sir Brandon. I still hold that view.

Mr. Campbell-Savours: This is a new proposition for some of us, and as we may wish to intervene later I wonder

whether my hon. Friend could explain the relationship between the new directors and the executive directors. What would their relationship be on a day-to-day basis? Would they operate in terms of permanent accountability or timetable accountability?

Mr. Garrett: If my hon. Friend will allow me to proceed just a little further, most of his questions will be answered more or less satisfactorily.
This issue has been debated at great length for years. There is general consensus in the corporate community of the value of independent directors. The best run companies already have them and their numbers are increasing. A distinguished organisation PRONED—Promotion of Non-Executive Directors—exists to encourage companies to take on independent directors and to promote the concept of such directors. It has said:
The purpose of appointing non-executive directors is to provide the board with knowledge, expertise, judgment and balance, which may not be available if the board consists only of full-time executives.
PRONED was set up by the stock exchange, the Bank of England and the CBI. Therefore, it is an establishment body of impeccable credentials and its aim is simply to improve the governance of our public companies.
Non-executives can make a contribution to the long-term development of a company because of their specialist skills. They can take a detached view, and they can often see through any potential conflicts of interest on a board. In the United States, they form the majority of boards of large companies.
PRONED suggests that there should be three non-executive or independent directors in medium-sized companies. Of The Times top 1,000 companies, only about 10 per cent. have no independent directors and 60 per cent. have three or more. There is a proposed Bank of England code which will encourage companies to have independent directors.
8.15 pm
Hon. Members on both sides of the Committee were disappointed that the Government opposed the concept of enshrining the position of independent directors in statute. The then Minister referred to the desirability flowing from
the contribution that those directors can make to the well-being of their companies".
He went on, I fear in an unintelligible passage, to say that the definition in the new clause did not encompass all the possible types of non-executive director. He said:
There are degrees of executiveness … We do not wish to place in company law … rigid distinctions which are alien to the way in which British company law has developed.
However company law has developed, companies have developed in such a way. It seemed to Opposition and Conservative Members who have advocated the cause for more years than I that the new clauses would be a useful prompt to companies to take on and benefit from independent directors.
The Minister also denied that the passage of the new clauses would give more momentum—what we wanted—to the move towards more independent directors. He said:
the new clauses would not advance that valuable trend."—[Official Report, Standing Committee D, 8 June 1989; C. 275–6.]
He then announced that the Government would oppose the new clauses, but did not tell us how the Government proposed to advance that valuable trend. I had imagined that the Government would have wanted to encourage it.


On a purely non-partisan basis, we believe that companies are better governed by boards of directors that include outside, independent or non-executive directors with no axe to grind and with the ability to take a detached view of the long-term development of the companies.
The new clauses relating to the audit committees follow from the new clauses relating to non-executive directors. The new clauses seek to establish a procedure for listed companies whereby the relationship with the auditor would be handled by a committee of the board. Such directors would not have a personal interest in the profitability of the company and in the manner in which it is reported, in comparison with executive directors, whose pay or bonuses are likely to have a significant profit-related element. Therefore, those directors would not have the same incentive, under any circumstances, to influence the auditors.
The typical specifications for an audit committee include that it should review financial statements prior to submission to the board for approval; review external auditors' findings and any lack of co-operation encountered during audit with a view to erasing those problems; review accounting policies for compliance with best practice; review periodically the effectiveness of systems of accounting and control; act as an advisory group to the board; review the effectiveness of internal audit and its reports; and discuss with the board and the auditors the significance of matters brought to light by audit and to make appropriate recommendations.
The advantages available from an effective audit committee are most likely to be realised by board members who are non-executive officers of the company. Those officers should be senior, well qualified and experienced individuals who should feel uninhibited about expressing their views on important issues.
From the auditors' point of view, they would expect the detailed contents of management letters, any qualifications in the audit report, any matters involving disagreement with the views of the board or matters pertaining to the auditors' reappointment and remuneration to be discussed.
The case for audit committees derives directly from the argument for independent directors. Those committees help directors to fulfil their legal obligations as to the accuracy of financial statements. They give directors the opportunity to consider issues at greater length and strengthen the objectivity and credibility of financial reporting and the independence of the audit function. They are also an important adjunct to protecting the interests of shareholders and they bring an objective, outside view of the company's financial conduct.
Therefore, I am sure that these provisions will receive the support of hon. Members of all parties. Indeed, this measure has, in effect, already passed through the House with an unopposed Third Reading. I look forward to the Government's support if it comes to a Division. We should have a Division on this, because the House should have an opportunity of expressing its view on the matter and, if we reach that stage, I expect many Conservative Members to join the Opposition in the Lobby.

Mr. Tim Smith: I support the new clause, because it is identical to a new clause that I introduced in Committee. I support it also because the words of all the new clauses in this group are taken from the private Member's Bill which I introduced earlier this year. Those words, in turn,

were taken from the Bill that was introduced last year by the late Sir Brandon Rhys Williams, which, as the hon. Member for Norwich, South (Mr. Garrett) has just reminded us, passed through the House unopposed.
However, I do not want to rehearse all the arguments in favour of the new clauses this evening, because we had a good debate in Committee. There was a consensus that independent directors and audit committees are a good thing. Indeed, that is why the CBI, the stock exchange and the Bank of England set up PRONED. The good news is contained in the figures that the hon. Member for Norwich, South gave the House about the proportion of The Times top 1,000 companies that now have one or more independent directors.
The question is, how do we make progress? The companies that do not have independent directors or audit committees almost certainly need them most. In such companies, the jobs of chairman and chief executive are rolled into one and one man often dominates the board—perhaps because he has a large shareholding in the company. Those are the companies that need these arrangements, but they are the companies that do not have them at present.
So, how are we to make progress? From experience of company law, I know that good and best practice has gradually developed to a point at which people have then said, "The time has now come when all companies should be required to do this. It is clearly the right way of going about things. We shall incorporate these things into company law." The example that I gave in Committee was the requirement to consolidate accounts. Many companies consolidated the accounts of their group companies years before the consolidation requirement was introduced in 1929. However, at that point consolidation was so widely the best practice that it was thought right to legislate.
How are we to move forward from the present situation where 90 per cent. of companies have one or more independent directors to a position where every company has a number of non-executive directors and an audit committee?
The proposals in the new clauses are relatively modest. In the first instance, they will simply require a company to consider the matter and to give some information to shareholders. In answer to the question, "How are we to make progress?", I shall be interested to hear whether my hon. Friend the Minister agrees that these are good ways in which to proceed and good ways of conducting companies. I shall also be interested to hear how he proposes to encourage a higher take-up of this good practice so that we eventually have a universal provision of independent directors and audit committees. If the Department of Trade and Industry believes these arrangements to be good, how does it propose to promote them?

Mr. Jim Cousins: I follow the hon. Member for Beaconsfield (Mr. Smith) in thinking that these amendments are relatively modest and moderate, yet the Government's argument on this point in Committee was obscure to say the least.
In Committee on 8 June, the then Minister stated:
The basis of argument is that by putting the matter into statute and having a separate category of independent directors, we would make it more difficult for the general movement towards more non-executive directors to take place."—[Official Report. Standing Committee D, 8 June 1989; c. 282.]


That argument is extremely perverse and hard to follow. It invites us to believe that if one brings a new category of people into existence, one is making it harder for that new category of people to come into existence. Plainly, the argument does not make sense.
I believe that the Minister was forced into such a contorted argument because he had no other arguments at his disposal on that occasion. As the hon. Member for Beaconsfield has rightly said, there was an effective consensus in Committee—although perhaps it was not always expressed in votes—that these provisions would be a desirable development and one that fitted with the general movements in the markets at large.
This may very well be one of the last opportunities on which we can deal with this matter in this way. Since the Standing Committee met in June and July, there have been further reports, revelations and a further air of unfortunate uncertainty about the conduct of people in the City, especially—but not only—in relation to takeover bids. The market pressure to produce a better system of director responsibility and accountability, not simply to the shareholders but to the markets at large, is almost irresistible.
We must agree to some kind of modest proposal which is self-acting in its mechanisms and simply asks people to occupy a certain role and to carry it out properly. None of the new clauses asks for complex regulatory mechanisms. If this matter cannot be dealt with at this juncture in the development of our financial and industrial markets by putting into place simple, modest and self-acting proposals, the only other alternative at a later date will be to accede to the growing demand for precise, externally imposed regulatory mechanisms which would not suit the needs of the time so well. It would be much better and in the interests of all parties if we could achieve a self-acting, self-regulating system by inviting new categories of people to come into existence, with a new remit and a sense of their own role when carrying out these wider responsibilities.
The stock exchange is asking us to move in precisely that direction. I noted with interest the report of the Listed Companies Advisory Committee, which was contained in the last annual report of the stock exchange. It carefully noted the need to produce a guideline for directors on investor relations which would remind directors of their wider responsibilities, not only to shareholders in that specific company, but to the investing community at large. The document outlined the legal framework that already exists and the responsibilities of directors.
This year the stock exchange has also supported the production of a new booklet entitled "Takeover Bids—A Guide for Directors", which states
Understanding their legal and regulatory responsibilities is essential if directors are to take rational and defensible decisions in takeover bid situations, and to communicate them effectively.
Obviously, that is not going as far as to underwrite our new clauses, but its meaning is clear. The financial markets and those experts in them are concerned about the lack of accountability and direction that has been shown by some directors in some key matters of grave public concern that have brought our financial markets into disrepute.
This is a modest opportunity to set in being a new category of actors on the industrial and financial scene,

with new responsibilities and a wider remit in the spirit of the recommendations of the Listed Companies Advisory Committee. Our opportunity to do that now is precious. If we do not take it and do not put in place this modest and limited system, we shall be faced later with almost unstoppable pressure for much more complex external regulatory mechanisms such as are in place elsewhere and such as produced the Financial Services Act 1986. It must be in the interests of both sides of the House to support the new clause and to head off that track. It would be unfortunate if, after a few more years of DTI inspectors' reports and of calamities such as Eagle Trust Holdings and the unfortunate image left by the Ferranti business, we were faced further down the road with irreversible pressure to put in place something as complicated in its own way as that Act proved to be.

Mr. Nelson: I, too, support the new clause strongly. My support follows on from my sponsorship of the private Member's Bill of the late Sir Brandon Rhys Williams and from my speeches in Committee in which I supported this measure. If the Government feel unable to accept the new clause—I hope that even now my hon. Friend will consider it sympathetically and change his mind—I shall certainly vote for it.
8.30 pm
This is an idea whose time has come—in fact, it came a long time ago. Something must be done now and if this measure does not pass tonight, it will, nevertheless, come. It is necessary and the only question is how many more scandals and abuses of shareholders' funds need to occur before the House is prepared to recognise in statute the need to separate some of the responsibilities and to accord to a non-executive element of boards of directors the duty objectively to assess the reports of accountants and to determine whether the affairs and liabilities of the company are being deployed in a wholly proper way.
I also congratulate my hon. Friend the Minister on his appointment. I urge on him in the strongest possible terms the importance that I and many others attach to the new clause. This measure went through the House without objection; the Government did not roll in people to vote it down. Because of a cluster of Lords in another place, it was eventually defeated on a despicable day and in an appalling way. However, we do not support it for those nostalgic reasons. We support it because it has been shown intrinsically necessary to have on a board of directors an element who can scrutinise affairs at arm's length and separately assess whether the liabilities and assets of the company are being used with integrity or deployed to an excessive degree. This element can also assess whether, as so often happens, a dominant chief executive or chairman who may appoint all the other members of the board is abusing his position of patronage.
No one would say that this has not happened or will not happen again. I join my hon. Friend the Member for Beaconsfield (Mr. Smith) in welcoming the extent to which so many companies have non-executive directors and the success of organisations such as Promotion of Non-Executive Directors, but the very companies that need effective non-executive directors are those that refuse to have them. They are the companies that use such directors' names on the list of directors instead of giving them an effective role of second guessing or inquiring into the policy decisions and finances of the companies concerned.
I suspect that my hon. Friend will refuse to accept the new clauses—I suppose that it would be impossible for him, as a newcomer, to move against the system, which has been in place for a long time in the Department. The system has won: it has put the House down time after time by ordering Ministers to resist this necessary measure—and I do not know why. The House of Commons, which is sovereign, has often said that this is a necessary measure, but, due to a gross error of judgment by Ministers of both parties, they have been persuaded not to proceed along the lines adopted in other countries.
I have great personal respect for my hon. Friend the Under-Secretary. I suppose that Ministers are still not persuaded to move from a purist view of the common responsibility of directors in a unitary board structure. None of those common responsibilities will be affected or undermined by superimposing on a unitary board structure certain additional responsibilities or overt responsibilities that directors must be seen to be carrying out. They are responsibilities that all directors should carry out already, but this measure will concentrate their minds because non-executive directors will know that they have a statutory responsibility to report to the annual general meeting. They will have a similar responsibility to hear from the accountants if they are worried, for instance, about the extent to which they are lending to another company and about other financial arrangements that may appear slightly suspect.
How many scandals and personal abuses of corporate money would have remained uncovered but for the existence of non-executive directors? Various examples have been mentioned and Blue Arrow may be one of them.
The problem arises in the many companies in which an individual controls the show and is unwilling to have on his board—and if he has them, to use them as an audit committee—some non-executive directors. If we maintain our unitary board structure and do not pursue a continental style of supervisory and executive boards—there is much to be said for maintaining what has proved good in the past—I believe strongly that the time has come for, and circumstances have shown the necessity of, having non-executive directors within the unitary board structure. Urging people to accept this voluntarily will not work in the companies that we most want to accept it.
Pressures exerted by people like myself and others in the House and the City on the stock exchange to make it a listing requirement of public limited companies to have an audit committee and non-executive directors have not been accepted. As so often, that is the trouble with our system of self-regulation: moves are made after events have pre-empted them. In other countries it is a listing requirement for major companies on the exchange, so why not here? Why does not our stock exchange council do exactly the same, at least for the plcs? Large private companies to which the same obligation should extend will remain, but if the plcs refuse it, there will still be problems. As long as a massive amount of personal and financial patronage rests with a few corporate individuals in this country, recent experience should have shown us that there is a strong case for a departure from the reluctance, conservatism and innate resistance on the part of the DTI's advisers to Ministers to allow a change that was universally accepted in the House on a previous occasion and that received enough support in Committee to enable the matter to he considered again tonight.
I respect my hon. Friend very much and I beg him, even if he cannot accept these measures, to throw away his notes and to speak to us from the heart telling us why he resists them and whether he will keep the door open for such a change. It would be a grave personal error of judgment, as well as a massive political one for our party, so to set ourselves against this provision that future events will be a hostage to fortune. I am not prepared to be a part of that. I have made my position clear and, like my hon. Friend the Member for Beaconsfield, I shall be consistent and support the new clause.

Mr. Campbell-Savours: The speech of the hon. Member for Chichester (Mr. Nelson) reminded me of debates in the Committee stage of the Financial Services Bill, when he put the case for a number of new clauses and amendments as eloquently as he has spoken this evening. He and I joined together and conspired behind closed doors to try to see those amendments through the Committee. I do not mean that in any distasteful way. The proceedings on that Bill are clearly replicated by the proceedings on this Bill. whose Committee stage I was unfortunately unable to attend, although that was my fault, and I regret it.
The issue that the Minister should tackle tonight is the one that I had to address as a member of that Standing Committee in 1986. When the Financial Services Bill was put before the Committee, Conservative Members were eager to accept the principle of self-regulation, and I understand why. Early in the debates on the Financial Services Bill most of the argument took place between Labour Members who questioned whether self-regulation could work. By the end of the Committee proceedings, I was one of those hon. Members who, following discussions with various institutions in the City, had accepted the proposition that self-regulation would work and I was willing to give way on statutory requirements, which we had begun by vigorously pursuing. I thought that if it were possible to introduce a system of self-regulation which people were motivated to ensure worked because thereby statutory controls would be avoided, that would secure the same objective. The arguments are similar this evening.
We have two propositions before us. There are those who say let the law take its course and let those directors who default be found and prosecuted, and there are people who say let us have a system based on some form of self-regulation whereby people within the company, with an arm's-length relationship with it, are able to monitor, check and observe its activities, particularly its financial arrangements. It is clear that these audit committees would work on an arm's-length arrangement, rather than its being exclusively the responsibility of management reporting directly to the main board.
I view this proposal in the same light as the debates on self-regulation during the Financial Services Bill Committee in 1986. The Minister should view them that way, because the alternative is clear.
I have brought a number of cases of fraud companies—sometimes large companies—to the attention of the House. I have wondered how it would be possible to check on them without setting up a huge statutory authority which could meddle in the affairs of companies in a way that right hon. and hon. Members on both sides of the House would find unacceptable. These proposals would provide a mechanism that could secure that objective.
The hon. Member for Richmond and Barnes (Mr. Hanley) has drawn my attention to a document that encapsulates my point very clearly—a report by Peat, Marwick McLintock on the audit committee. The introduction says that, in recent years, the presentation of financial information by commercial organisations has been subject to increasingly stringent standards of accountability. This trend has been accompanied by a few highly publicised instances of fraud and corporate failure which have focused attention on the stewardship responsibilities of the boards of directors, particularly in relation to the fair presentation of financial information and the accounting controls of the business. The board of directors is legally responsible for ensuring that the financial statements give a true and fair view, yet the board's detailed involvement in the preparation of those accounts may be minimal.
These people are reputable and know all about these matters. I presume that they have been campaigning on them for years and have consulted widely, as did members of the Committee. The board's detailed involvement in the preparation of those accounts may be minimal, however, as the financial management usually prepares the annual accounts. The board may often rely on an external auditor's expertise to ensure that no material misstatements exist.
These people understand the problem and they are making a proposition. They know it works and, as the hon. Member for Chichester said, in other countries such arrangements are already standard practice. I support the view that he advanced that, if companies want to be listed, they should be required to comply with the arrangements, if only to safeguard the interests of shareholders in companies where large shareholdings may be held by individual directors whose power and influence on the affairs of the company is therefore draconian. Surely inside those boards one needs a committee or some independent directors who can report and give a more arm's-length, independent view of what is happening.
8.45 pm
I do not want to undermine my case, but I shall draw the House's attention to one independent directorate with whom I have had some dealings in the past few months which is well known to the hon. Member for Beaconsfield (Mr. Smith). The Observer newspaper has a board of independent directors which was set up prior to the takeover by Lonrho, but I feel sure that what we are advocating is not similar to that arrangement. It was a way to try to reassure the public, journalists, readers and others that the company would not be unreasonably manipulated by Mr. Tiny Rowland and his cohorts in Cheapside. Unfortunately, that board of independent directors did not do its job properly and the newspaper has been manipulated, which is why its circulation has fallen so dramatically and why it will probably be out of business in no time. That is something that the journalists on that newspaper have to sort out and it is to be hoped that Mr. Tiny Rowland will divest himself of control of that newspaper. That is not the kind of independent board of directors that we are looking for. We want a body with teeth, which has an arm's-length relationship, and which will report and consider the financial affairs of a company independently.
The Minister should consider the reasonable arguments that have been put by right hon. and hon. Members from both sides of the House when he replies to this debate.

Mr. Redwood: I share the interests of right hon. and hon. Members on both sides of the House who have argued so eloquently in favour of more non-executive directors, particularly in companies that have not yet taken any steps towards having a reasonable number or which do not have any at all. I welcome the trend towards an increasing number of non-executive directors. As hon. Members on both sides of the House have said, that is happening. There is a healthy growth in their number on the boards of major British companies.
Before I was elected to the House, I was a non-executive director of an industrial public company, and I hope that some of the issues I raised made a contribution to the progress of the company. I do not need persuading that non-executive directors have an important role and are desirable. Many right hon. and hon. Members have quite rightly asked me how their number will increase if there is no statutory requirement to place such people on boards. I think they will spread for the same reasons and by the same mechanisms which have caused them to spread in recent years.
First, the excellent work by Promotion of Non-Executive Directors, which has been praised in this debate, will continue. The service that it provides by advising companies and making available lists of suitable candidates is invaluable and is encouraging many companies to increase the number or to take the step towards having some.
Secondly, the role of the Bank of England is important, and that has been mentioned. Thirdly, the fact that it is good practice for companies to take on such people is becoming widely accepted in the City, in the financial markets and among shareholder groups, and that will lead to more pressures for non-executive appointments. Finally, there will be shareholder and banker pressure in particular cases, and perhaps more generally, if companies do not have boards that meet the requirements of shareholders and bankers when discussing company matters at the AGM or putting forward loan proposals and other financial arrangements.
The new clause is similar to proposals voted down after extensive discussion in Committee. I have three fears about moving to a statutory system. First, I am advised that the basis of British company law depends on the creation of the category of director and the law does not recognise whether people work full time, part time or very little at all. If I accept the new clause, I cannot be sure that the rest of company law would work, because we would be intruding the concept of independent directors on existing company law based on a single category of director with general responsibilities. That could be dangerous and could have consequences not foreseen by the supporters of the new clause.
The second matter relates to my understanding and view of how company boards work. One of my hon. Friends said that he thought that Ministers were concerned about the tradition of collective decision taking on company boards. Such a proposal, cast in the way that it is and with the modest pressures suggested in the new clause, could disrupt that tradition of collective decision


taking and could make personal relationships within boards more difficult. That might not be in the interests of shareholders or the company.
In the end, a company depends on good debate in the board, mutual trust between all its members, and a belief by the non-executives that the chief executive or the chairman—or both if they are executive jointly—are broadly taking the company in the right direction and making the right decisions. The non-executives can apply pressures and skills to individual policies. It is rare for non-executives to have to take more decisive action about the structure of the executive board. If they were there as a separate group clearly marked by law it could create more tensions and hostilities which could create suspicions within the board. That might not be desirable.
My final reason for not accepting the new clause is that while the House could pass the measure and each company designated under the proposal would have to appoint independent directors who would be so named by the clauses, we could not guarantee that they would be genuinely independent people. It depends on the dynamics of the company and the politics of the board, but it is possible to imagine that in companies with chief executives or chairmen who were powerful in the way that has been described devices could be formulated by which people could be appointed to the boards on the tacit understanding that they did not exercise full independence of the kind that hon. Members wish to see.
The House should know that in their reports listed companies already have to reveal which directors are non-executive and must furnish short biographies of them. Therefore, some of the requirements for information are already met by existing arrangements for listed companies.
I shall now deal with audit committees which I think are a good idea. When I was a non-executive director we moved to establish an audit committee and it worked out an agenda of quite useful work. At the beginning, I was a member of a board that in many respects did not operate through audit committees, and that meant that the business came to the board itself. That can be a perfectly satisfactory way to proceed. Some companies prefer to work through many committees and will have strong views on the disposition of non-executive and executive directors of those committees. Others wish to do that through the board.
We cannot get away from the central point that if the main issue is controlling fraud or malpractice, the main defence for the shareholder in the presentation of the figures and accounts is the appointment of a good independent auditor. It is for good reason that that is a shareholder power in all companies. The auditor has a close relationship with a company, but he must be genuinely independent and must answer to shareholders. Modern audit is time consuming.
The hon. Member for Workington (Mr. Campbell-Savours) asked if there could be delay. The answer is no, because if the audit is of systems the auditor is trying to satisfy himself that the company has systems that usually work well and guarantee honesty and accuracy of reporting. Much modern audit is systems audit and not counting the figures in each of the books.
For those reasons, but with some reluctance, I urge the House to vote against the new clause. I am a strong believer in spreading the gospel of non-executive directors, but these proposals are not constructive in the right way

and there are good signs that shareholders, bankers and other financial market people are moving companies in that direction. I welcome that.

Mr. Campbell-Savours: I understand the hon. Gentleman when he talks about systems in so far as he is putting to the House that the auditors he talks about are ensuring that the systems are in place when they come in perhaps once a year. Things can happen fast. A large shareholder who is a director of a company and whose holding might be worth hundreds of millions—we know that there are such directors—may well in a matter of months be able to manipulate the accounts in order to misappropriate large sums or engage in fraud. How would he be caught? Perhaps systems could be modified before the auditors about which the Minister spoke examined the accounts. Surely to some extent there is a case for having this more permanent role.

Mr. Redwood: That is not a strong argument. Someone who tries to mislead or carry out fraud and is in a powerful position could surely hoodwink the auditors and would most surely be able to hoodwink the non-executive directors who might meet in audit committee three or four times a year. Those non-executive directors depend primarily for their information and for the agenda of their committee on matters brought to their attention by the auditor. Anyone who looks at the structure of an audit committee will conclude that the main line of protection against fraud or malfeasance or twisting of the figures lies in accurate and clear auditing by a good independent auditor.

Mr. John Garrett: This has been a sensible and reasonable debate. The arguments in favour of our new clause were put as well by the hon. Members for Chichester (Mr. Nelson) and for Beaconsfield (Mr. Smith) as by any Opposition Member. The arguments are becoming unanswerable. The middle of the Minister's speech was an endorsement of the concept of independent directors and could well have ended with an acceptance of the new clause—until we reached his objections to independent directors being enshrined in statute.
The Minister had three objections. He spoke of the unforeseen consequences of the clause, having foreseen the same consequences happening naturally. He had already said that if——

Mr. Redwood: rose——

Mr. Garrett: Let me explain before the Minister jumps up. He said that the consequences of the clause are unforeseen yet it encourages the development of independent directors. He then advocated the spreading of independent directors as they have spread in the past. In other words, he accepted the principle but denied the means.

Mr. Redwood: There is an important legal distinction here. I welcome the principle of more non-executive' directors being appointed to boards, but each of those directors would serve on those boards with full collective responsibility and would be recognised in law as being entirely the same as executive directors in terms of their responsibilities. The new clause introduces the idea that there would be a group of people called independent


directors. I cannot accept that tonight, because I have to think through the consequences of that for the rest of company law. My advice is that it could cause difficulties.

9 pm

Mr. Garrett: Our advice is that it would not cause the difficulties that the Minister fears.
In the Minister's second objection, he spoke of the impact on collective decision-taking. We propose leavening the wisdom of the collective with independent minds. He said that the proposals would not guarantee that the directors would be independent. That is true, but it would increase the likelihood of having independent advice on a board of directors. Once again, he has willed the end but denied the means.
I have tried to develop the argument that good independent objective audit would be facilitated by the existence of audit committees and I tried to explain the relationship between audit committees and the outside auditors. Given the history of the matter, it is time that the opinion of the House was tested. I ask those of progressive mind on both sides of the House to vote for the new clauses.

Question put, That the clause be read a Second time:—

The House divided: Ayes 159, Noes 200.

Division No. 340]
[9.01 pm


AYES


Abbott, Ms Diane
Davies, Ron (Caerphilly)


Allen, Graham
Davis, Terry (B'ham Hodge H'l)


Anderson, Donald
Dewar, Donald


Archer, Rt Hon Peter
Dixon, Don


Armstrong, Hilary
Dobson, Frank


Ashley, Rt Hon Jack
Doran, Frank


Ashton, Joe
Dunwoody, Hon Mrs Gwyneth


Barnes, Harry (Derbyshire NE)
Eadie, Alexander


Barron, Kevin
Ewing, Harry (Falkirk E)


Battle, John
Ewing, Mrs Margaret (Moray)


Beckett, Margaret
Fatchett, Derek


Bell, Stuart
Fearn, Ronald


Benn, Rt Hon Tony
Field, Frank (Birkenhead)


Bennett, A. F. (D'nt'n &amp; R'dish)
Flannery, Martin


Bermingham, Gerald
Flynn, Paul


Bidwell, Sydney
Foster, Derek


Blunkett, David
Fyfe, Maria


Boyes, Roland
Galloway, George


Bradley, Keith
Garrett, John (Norwich South)


Brown, Gordon (D'mline E)
Garrett, Ted (Wallsend)


Brown, Nicholas (Newcastle E)
Godman, Dr Norman A.


Bruce, Malcolm (Gordon)
Golding, Mrs Llin


Buchan, Norman
Gordon, Mildred


Buckley, George J.
Gould, Bryan


Campbell, Menzies (Fife NE)
Griffiths, Nigel (Edinburgh S)


Campbell, Ron (Blyth Valley)
Griffiths, Win (Bridgend)


Campbell-Savours, D. N.
Hardy, Peter


Canavan, Dennis
Harman, Ms Harriet


Carlile, Alex (Mont'g)
Heffer, Eric S.


Clark, Dr David (S Shields)
Hinchliffe, David


Clay, Bob
Home Robertson, John


Clelland, David
Howarth, George (Knowsley N)


Clwyd, Mrs Ann
Howells, Geraint


Cohen, Harry
Howells, Dr. Kim (Pontypridd)


Cook, Robin (Livingston)
Hughes, John (Coventry NE)


Corbett, Robin
Hughes, Robert (Aberdeen N)


Corbyn, Jeremy
Illsley, Eric


Cousins, Jim
Ingram, Adam


Cryer, Bob
Janner, Greville


Cummings, John
Jones, Barry (Alyn &amp; Deeside)


Cunliffe, Lawrence
Jones, Martyn (Clwyd S W)


Darling, Alistair
Kennedy, Charles


Davies, Rt Hon Denzil (Llanelli)
Leadbitter, Ted





Leighton, Ron
Quin, Ms Joyce


Lewis, Terry
Radice, Giles


Litherland, Robert
Randall, Stuart


Livingstone, Ken
Reid, Dr John


Livsey, Richard
Richardson, Jo


Lofthouse, Geoffrey
Robertson, George


Loyden, Eddie
Rooker, Jeff


McAllion, John
Ross, Ernie (Dundee W)


McAvoy, Thomas
Ruddock, Joan


McCartney, Ian
Salmond, Alex


Macdonald, Calum A.
Sedgemore, Brian


McKelvey, William
Sheerman, Barry


McLeish, Henry
Sheldon, Rt Hon Robert


Maclennan, Robert
Short, Clare


McNamara, Kevin
Skinner, Dennis


Madden, Max
Smith, Andrew (Oxford E)


Mahon, Mrs Alice
Smith, C. (Isl'ton &amp; F'bury)


Marek, Dr John
Smith, Rt Hon J. (Monk'ds E)


Marshall, Jim (Leicester S)
Smith, J. P. (Vale of Glam)


Martlew, Eric
Smith, Tim (Beaconsfield)


Meacher, Michael
Steinberg, Gerry


Meale, Alan
Straw, Jack


Michael, Alun
Thompson, Jack (Wansbeck)


Michie, Bill (Sheffield Heeley)
Turner, Dennis


Michie, Mrs Ray (Argl &amp; Bute)
Vaz, Keith


Moonie, Dr Lewis
Wallace, James


Morgan, Rhodri
Watson, Mike (Glasgow, C)


Morley, Elliot
Welsh, Andrew (Angus E)


Mowlam, Marjorie
Welsh, Michael (Doncaster N)


Mullin, Chris
Williams, Rt Hon Alan


Nelson, Anthony
Wilson, Brian


Oakes, Rt Hon Gordon
Winnick, David


Owen, Rt Hon Dr David
Worthington, Tony


Parry, Robert
Wray, Jimmy


Patchett, Terry



Pike, Peter L.
Tellers for the Ayes:


Powell, Ray (Ogmore)
Mr. Frank Haynes and


Prescott, John
Mr. Ken Eastham.


Primarolo, Dawn





NOES


Aitken, Jonathan
Cash, William


Alexander, Richard
Chalker, Rt Hon Mrs Lynda


Alison, Rt Hon Michael
Chapman, Sydney


Allason, Rupert
Chope, Christopher


Amess, David
Clark, Sir W. (Croydon S)


Amos, Alan
Coombs, Anthony (Wyre F'rest)


Arbuthnot, James
Coombs, Simon (Swindon)


Ashby, David
Cormack, Patrick


Atkins, Robert
Couchman, James


Atkinson, David
Curry, David


Baker, Nicholas (Dorset N)
Davies, Q. (Stamf'd &amp; Spald'g)


Baldry, Tony
Davis, David (Boothferry)


Batiste, Spencer
Day, Stephen


Bellingham, Henry
Dicks, Terry


Bendall, Vivian
Dorrell, Stephen


Bennett, Nicholas (Pembroke)
Douglas-Hamilton, Lord James


Benyon, W.
Dover, Den


Biffen, Rt Hon John
Dunn, Bob


Blackburn, Dr John G.
Durant, Tony


Blaker, Rt Hon Sir Peter
Evans, David (Welwyn Hatf'd)


Bonsor, Sir Nicholas
Evennett, David


Boscawen, Hon Robert
Favell, Tony


Boswell, Tim
Fenner, Dame Peggy


Bottomley, Mrs Virginia
Field, Barry (Isle of Wight)


Bowis, John
Fishburn, John Dudley


Boyson, Rt Hon Dr Sir Rhodes
Fookes, Dame Janet


Brandon-Bravo, Martin
Forman, Nigel


Brazier, Julian
Forsyth, Michael (Stirling)


Brown, Michael (Brigg &amp; Cl't's)
Forth, Eric


Bruce, Ian (Dorset South)
Fowler, Rt Hon Norman


Buck, Sir Antony
Fox, Sir Marcus


Burns, Simon
Freeman, Roger


Burt, Alistair
French, Douglas


Butcher, John
Gale, Roger


Butler, Chris
Gardiner, George


Carlisle, John, (Luton N)
Garel-Jones, Tristan


Carlisle, Kenneth (Lincoln)
Glyn, Dr Alan


Carrington, Matthew
Goodlad, Alastair


Carttiss, Michael
Goodson-Wickes, Dr Charles






Gow, Ian
Nicholson, Emma (Devon West)


Grant, Sir Anthony (CambsSW)
Norris, Steve


Greenway, Harry (Baling N)
Onslow, Rt Hon Cranley


Griffiths, Peter (Portsmouth N)
Patnick, Irvine


Ground, Patrick
Pawsey, James


Grylls, Michael
Peacock, Mrs Elizabeth


Gummer, Rt Hon John Selwyn
Porter, David (Waveney)


Hague, William
Powell, William (Corby)


Hamilton, Neil (Tatton)
Redwood, John


Hampson, Dr Keith
Riddick, Graham


Hanley, Jeremy
Ridley, Rt Hon Nicholas


Hannam, John
Ridsdale, Sir Julian


Harris, David
Rossi, Sir Hugh


Haselhurst, Alan
Rost, Peter


Hayward, Robert
Sackville, Hon Tom


Heathcoat-Amory, David
Sainsbury, Hon Tim


Hicks, Mrs Maureen (Wolv' NE)
Shaw, David (Dover)


Higgins, Rt Hon Terence L.
Shaw, Sir Giles (Pudsey)


Hind, Kenneth
Shephard, Mrs G. (Norfolk SW)


Hordern, Sir Peter
Shepherd, Richard (Aldridge)


Howard, Michael
Shersby, Michael


Hunt, David (Wirral W)
Smith, Sir Dudley (Warwick)


Hunt, Sir John (Ravensbourne)
Soames, Hon Nicholas


Hunter, Andrew
Speller, Tony


Irvine, Michael
Spicer, Sir Jim (Dorset W)


Jack, Michael
Spicer, Michael (S Worcs)


Janman, Tim
Stanbrook, Ivor


Jessel, Toby
Stanley, Rt Hon Sir John


Jones, Gwilym (Cardiff N)
Steen, Anthony


Kellett-Bowman, Dame Elaine
Stevens, Lewis


Key, Robert
Stewart, Andy (Sherwood)


Kilfedder, James
Stradling Thomas, Sir John


Kirkhope, Timothy
Sumberg, David


Knapman, Roger
Summerson, Hugo


Knight, Greg (Derby North)
Taylor, Teddy (S'end E)


Knight, Dame Jill (Edgbaston)
Thompson, D. (Calder Valley)


Knox, David
Thompson, Patrick (Norwich N)


Lang, Ian
Thorne, Neil


Latham, Michael
Thornton, Malcolm


Leigh, Edward (Gainsbor'gh)
Thurnham, Peter


Lester, Jim (Broxtowe)
Townend, John (Bridlington)


Lilley, Peter
Townsend, Cyril D. (B'heath)


Lord, Michael
Tracey, Richard


Lyell, Sir Nicholas
Waddington, Rt Hon David


Macfarlane, Sir Neil
Wakeham, Rt Hon John


MacGregor, Rt Hon John
Walker, Bill (T'side North)


MacKay, Andrew (E Berkshire)
Waller, Gary


Maclean, David
Walters, Sir Dennis


McLoughlin, Patrick
Ward, John


McNair-Wilson, Sir Michael
Wardle, Charles (Bexhill)


Madel, David
Watts, John


Malins, Humfrey
Wheeler, John


Mans, Keith
Whitney, Ray


Maples, John
Widdecombe, Ann


Marshall, John (Hendon S)
Wiggin, Jerry


Marshall, Michael (Arundel)
Winterton, Mrs Ann


Martin, David (Portsmouth S)
Winterton, Nicholas


Maxwell-Hyslop, Robin
Wolfson, Mark


Meyer, Sir Anthony
Wood, Timothy


Miscampbell, Norman



Morrison, Sir Charles
Tellers for the Noes:


Nicholls, Patrick
Mr. Michael Fallon and Mr. John M. Taylor. 


Nicholson, David (Taunton)

Question accordingly negatived.

Clause 3

A COMPANY'S FINANCIAL YEAR AND ACCOUNTING REFERENCE PERIODS

Mr. Redwood: I beg to move amendment No. 7, in page 4, line 44, leave out 'Part I' and insert 'section 3'.

The Deputy Speaker (Sir Paul Dean): With this we shall discuss Government amendments Nos. 8, 9, 11, 12, 16, 18 to 21, 24, 31) and 32 to 67.

Mr. Redwood: These amendments make a number of minor changes to part I. Nos. 7 and 8 replace a reference to the commencement of part 1 of the Bill with a reference to the specific provision in question, to allow for the possibility that different provisions in the part are brought into force at different times. Nos. 9 and 10 simply improve the clarity of the part, No. 12 corrects a reference, No. 20 corrects a minor error and No. 24 makes it clear how references to the day on which accounts are sent to shareholders and others are to be interpreted. Nos. 33 and 34 make a minor change to the order-making power in new section 257. They put it beyond doubt that the power includes the power to make consequential amendments elsewhere in the 1985 Act and in other enactments and to make transitional provisions.
The other amendments are all consequential amendments of one form or another.

Question put, That the amendment be made:—

The House divided: Ayes 191, Noes 62.

Division No. 341]
[9.17pm


AYES


Aitken, Jonathan
Dover, Den


Alexander, Richard
Dunn, Bob


Alison, Rt Hon Michael
Durant, Tony


Allason, Rupert
Evennett, David


Amess, David
Favell, Tony


Amos, Alan
Fearn, Ronald


Arbuthnot, James
Field, Barry (Isle of Wight)


Ashby, David
Fishburn, John Dudley


Atkins, Robert
Fookes, Dame Janet


Atkinson, David
Forman, Nigel


Baker, Nicholas (Dorset N)
Forsyth, Michael (Stirling)


Batiste, Spencer
Forth, Eric


Bellingham, Henry
Fowler, Rt Hon Norman


Bennett, Nicholas (Pembroke)
Fox, Sir Marcus


Benyon, W.
Freeman, Roger


Biffen, Rt Hon John
French, Douglas


Bonsor, Sir Nicholas
Gale, Roger


Boscawen, Hon Robert
Garel-Jones, Tristan


Boswell, Tim
Glyn, Dr Alan


Bottomley, Mrs Virginia
Goodlad, Alastair


Bowis, John
Goodson-Wickes, Dr Charles


Brandon-Bravo, Martin
Gow, Ian


Brazier, Julian
Greenway, Harry (Ealing N)


Brown, Michael (Brigg &amp; Cl't's)
Griffiths, Peter (Portsmouth N)


Bruce, Ian (Dorset South)
Ground, Patrick


Bruce, Malcolm (Gordon)
Gummer, Rt Hon John Selwyn


Buck, Sir Antony
Hague, William


Burns, Simon
Hamilton, Neil (Tatton)


Burt, Alistair
Hampson, Dr Keith


Butcher, John
Hanley, Jeremy


Butler, Chris
Harris, David


Butterfill, John
Haselhurst, Alan


Campbell, Menzies (Fife NE)
Hayward, Robert


Carlile, Alex (Mont'g)
Heathcoat-Amory, David


Carlisle, John, (Luton N)
Hicks, Mrs Maureen (Wolv' NE)


Carlisle, Kenneth (Lincoln)
Higgins, Rt Hon Terence L.


Carrington, Matthew
Hind, Kenneth


Carttiss, Michael
Hordern, Sir Peter


Cash, William
Howard, Michael


Chalker, Rt Hon Mrs Lynda
Howells, Geraint


Chapman, Sydney
Hunt, David (Wirral W)


Chope, Christopher
Hunt, Sir John (Ravensbourne)


Clark, Sir W. (Croydon S)
Hunter, Andrew


Coombs, Anthony (Wyre F'rest)
Irvine, Michael


Coombs, Simon (Swindon)
Jack, Michael


Cormack, Patrick
Janman, Tim


Currie, Mrs Edwina
Jessel, Toby


Curry, David
Jones, Gwilym (Cardiff N)


Davies, Q. (Stamf'd &amp; Spald'g)
Kellett-Bowman, Dame Elaine


Davis, David (Boothferry)
Kennedy, Charles


Day, Stephen
Key, Robert


Dicks, Terry
Kilfedder, James


Dorrell, Stephen
Knapman, Roger


Douglas-Hamilton, Lord James
Knight, Greg (Derby North)






Knight, Dame Jill (Edgbaston)
Shepherd, Richard (Aldridge)


Knowles, Michael
Shersby, Michael


Knox, David
Smith, Sir Dudley (Warwick)


Lang, Ian
Smith, Tim (Beaconsfield)


Latham, Michael
Speller, Tony


Leigh, Edward (Gainsbor'gh)
Spicer, Sir Jim (Dorset W)


Lilley, Peter
Spicer, Michael (S Worcs)


Livsey, Richard
Stanbrook, Ivor


Lord, Michael
Steen, Anthony


Lyell, Sir Nicholas
Stevens, Lewis


MacGregor, Rt Hon John
Stewart, Andy (Sherwood)


MacKay, Andrew (E Berkshire)
Stradling Thomas, Sir John


Maclean, David
Sumberg, David


Maclennan, Robert
Summerson, Hugo


McLoughlin, Patrick
Taylor, John M (Solihull)


McNair-Wilson, Sir Michael
Thompson, D. (Calder Valley)


Madel, David
Thompson, Patrick (Norwich N)


Mans, Keith
Thorne, Neil


Maples, John
Thurnham, Peter


Marland, Paul
Townend, John (Bridlington)


Marshall, John (Hendon S)
Townsend, Cyril D. (B'heath)


Martin, David (Portsmouth S)
Tracey, Richard


Maxwell-Hyslop, Robin
Twinn, Dr Ian


Meyer, Sir Anthony
Waddington, Rt Hon David


Miscampbell, Norman
Wakeham, Rt Hon John


Morrison, Sir Charles
Walker, Bill (T'side North)


Nelson, Anthony
Wallace, James


Newton, Rt Hon Tony
Walters, Sir Dennis


Nicholls, Patrick
Ward, John


Nicholson, Emma (Devon West)
Wardle, Charles (Bexhill)


Norris, Steve
Watts, John


Onslow, Rt Hon Cranley
Wheeler, John


Patnick, Irvine
Whitney, Ray


Pawsey, James
Widdecombe, Ann


Peacock, Mrs Elizabeth
Wiggin, Jerry


Powell, William (Corby)
Winterton, Mrs Ann


Redwood, John
Winterton, Nicholas


Riddick, Graham
Wolfson, Mark


Ridley, Rt Hon Nicholas
Wood, Timothy


Ridsdale, Sir Julian



Sainsbury, Hon Tim
Tellers for the Ayes:


Shaw, David (Dover)
Mr. Tom Sackville and


Shaw, Sir Giles (Pudsey)
 Mr. Michael Fallon.


Shephard, Mrs G. (Norfolk SW)





NOES


Ashley, Rt Hon Jack
Jones, Barry (Alyn &amp; Deeside)


Ashton, Joe
Lewis, Terry


Barnes, Harry (Derbyshire NE)
Livingstone, Ken


Barron, Kevin
Lofthouse, Geoffrey


Bermingham, Gerald
McCartney, Ian


Bradley, Keith
Madden, Max


Campbell, Ron (Blyth Valley)
Mahon, Mrs Alice


Campbell-Savours, D. N.
Martlew, Eric


Canavan, Dennis
Meale, Alan


Clay, Bob
Michael, Alun


Clelland, David
Michie, Bill (Sheffield Heeley)


Clwyd, Mrs Ann
Morgan, Rhodri


Cohen, Harry
Mowlam, Marjorie


Corbyn, Jeremy
Mullin, Chris


Cryer, Bob
Oakes, Rt Hon Gordon


Cummings, John
Parry, Robert


Cunliffe, Lawrence
Patchett, Terry


Ewing, Mrs Margaret (Moray)
Pike, Peter L.


Flynn, Paul
Powell, Ray (Ogmore)


Fyfe, Maria
Primarolo, Dawn


Galloway, George
Ross, Ernie (Dundee W)


Godman, Dr Norman A.
Short, Clare


Golding, Mrs Llin
Skinner, Dennis


Gordon, Mildred
Steinberg, Gerry


Hardy, Peter
Vaz, Keith


Harman, Ms Harriet
Watson, Mike (Glasgow, C)


Haynes, Frank
Welsh, Andrew (Angus E)


Hinchliffe, David
Williams, Rt Hon Alan


Hoey, Ms Kate (Vauxhall)
Wray, Jimmy


Home Robertson, John



Hughes, John (Coventry NE)
Tellers for the Noes:


Illsley, Eric
Mr. George J. Buckley and


Janner, Greville
Mr. Michael Welsh.

Question accordingly agreed to.

Amendment proposed: No. 8, in page 4, line 47, leave out 'Part' and insert `section'.—[Mr. Redwood.]

Question put, That the amendment be made:—

The House divided: Ayes 168, Noes 49.

Division No. 342]
[9.29 pm


AYES


Alexander, Richard
Gummer, Rt Hon John Selwyn


Amos, Alan
Hague, William


Arbuthnot, James
Hamilton, Neil (Tatton)


Ashby, David
Hanley, Jeremy


Atkinson, David
Haselhurst, Alan


Baker, Nicholas (Dorset N)
Hayward, Robert


Batiste, Spencer
Hicks, Mrs Maureen (Wolv' NE)


Bellingham, Henry
Higgins, Rt Hon Terence L.


Bennett, Nicholas (Pembroke)
Hind, Kenneth


Benyon, W.
Howard, Michael


Biffen, Rt Hon John
Howells, Geraint


Boscawen, Hon Robert
Hunt, David (Wirral W)


Boswell, Tim
Hunt, Sir John (Ravensbourne)


Bowis, John
Hunter, Andrew


Braine, Rt Hon Sir Bernard
Irvine, Michael


Brazier, Julian
Jack, Michael


Brown, Michael (Brigg &amp; Cl't's)
Janman, Tim


Bruce, Ian (Dorset South)
Jessel, Toby


Bruce, Malcolm (Gordon)
Jones, Gwilym (Cardiff N)


Buck, Sir Antony
Key, Robert


Burns, Simon
Kilfedder, James


Burt, Alistair
Knapman, Roger


Butler, Chris
Knight, Greg (Derby North)


Butterfill, John
Knight, Dame Jill (Edgbaston)


Campbell, Menzies (Fife NE)
Knowles, Michael


Carlile, Alex (Mont'g)
Knox, David


Carlisle, John, (Luton N)
Lang, Ian


Carlisle, Kenneth (Lincoln)
Latham, Michael


Carrington, Matthew
Lester, Jim (Broxtowe)


Carttiss, Michael
Lilley, Peter


Cash, William
Livsey, Richard


Chalker, Rt Hon Mrs Lynda
Lord, Michael


Chapman, Sydney
Lyell, Sir Nicholas


Chope, Christopher
MacGregor, Rt Hon John


Clark, Sir W. (Croydon S)
Maclean, David


Coombs, Anthony (Wyre F'rest)
McLoughlin, Patrick


Coombs, Simon (Swindon)
McNair-Wilson, Sir Michael


Cormack, Patrick
Madel, David


Currie, Mrs Edwina
Mans, Keith


Curry, David
Marland, Paul


Davies, Q. (Stamf'd &amp; Spald'g)
Marshall, John (Hendon S)


Davis, David (Boothferry)
Martin, David (Portsmouth S)


Day, Stephen
Maxwell-Hyslop, Robin


Dicks, Terry
Meyer, Sir Anthony


Dorrell, Stephen
Mills, Iain


Douglas-Hamilton, Lord James
Miscampbell, Norman


Dover, Den
Morrison, Sir Charles


Dunn, Bob
Nelson, Anthony


Durant, Tony
Nicholls, Patrick


Evennett, David
Nicholson, Emma (Devon West)


Fallon, Michael
Norris, Steve


Favell, Tony
Onslow, Rt Hon Cranley


Fearn, Ronald
Patnick, Irvine


Field, Barry (Isle of Wight)
Pawsey, James


Fishburn, John Dudley
Peacock, Mrs Elizabeth


Fookes, Dame Janet
Powell, William (Corby)


Forman, Nigel
Redwood, John


Forsyth, Michael (Stirling)
Riddick, Graham


Forth, Eric
Ridley, Rt Hon Nicholas


Fox, Sir Marcus
Ridsdale, Sir Julian


Freeman, Roger
Shaw, David (Dover)


French, Douglas
Shaw, Sir Giles (Pudsey)


Gale, Roger
Shephard, Mrs G. (Norfolk SW)


Garel-Jones, Tristan
Shersby, Michael


Glyn, Dr Alan
Smith, Tim (Beaconsfield)


Goodlad, Alastair
Soames, Hon Nicholas


Goodson-Wickes, Dr Charles
Speller, Tony


Gow, Ian
Spicer, Sir Jim (Dorset W)


Greenway, Harry (Ealing N)
Spicer, Michael (S Worcs)


Griffiths, Peter (Portsmouth N)
Steen, Anthony


Ground, Patrick
Stevens, Lewis






Stewart, Andy (Sherwood)
Ward, John


Stradling Thomas, Sir John
Wardle, Charles (Bexhill)


Summerson, Hugo
Watts, John


Taylor, John M (Solihull)
Wheeler, John


Thompson, D. (Calder Valley)
Widdecombe, Ann


Thompson, Patrick (Norwich N)
Wiggin, Jerry


Thorne, Neil
Winterton, Mrs Ann


Thurnham, Peter
Winterton, Nicholas


Townsend, Cyril D. (B'heath)
Wolfson, Mark


Tracey, Richard
Wood, Timothy


Twinn, Dr Ian



Waddington, Rt Hon David
Tellers for the Ayes:


Wakeham, Rt Hon John
Mr. David Heathcoat-Amory and Mr. Torn Sackville.


Walker, Bill (T'side North)



Wallace, James



Walters, Sir Dennis





NOES


Ashton, Joe
Jones, Barry (Alyn &amp; Deeside)


Barnes, Harry (Derbyshire NE)
Lofthouse, Geoffrey


Barron, Kevin
McCartney, Ian


Campbell, Ron (Blyth Valley)
Mahon, Mrs Alice


Campbell-Savours, D. N.
Meale, Alan


Canavan, Dennis
Michael, Alun


Clwyd, Mrs Ann
Michie, Bill (Sheffield Heeley)


Corbyn, Jeremy
Morgan, Rhodri


Cousins, Jim
Parry, Robert


Cryer, Bob
Patchett, Terry


Cummings, John
Pike, Peter L.


Cunliffe, Lawrence
Powell, Ray (Ogmore)


Dixon, Don
Primarolo, Dawn


Ewing, Mrs Margaret (Moray)
Ross, Ernie (Dundee W)


Flynn, Paul
Salmond, Alex


Galloway, George
Sheerman, Barry


Gilbert, Rt Hon Dr John
Skinner, Dennis


Golding, Mrs Llin
Steinberg, Gerry


Hardy, Peter
Vaz, Keith


Harman, Ms Harriet
Welsh, Andrew (Angus E)


Haynes, Frank
Williams, Rt Hon Alan


Hinchliffe, David
Wray, Jimmy


Hoey, Ms Kate (Vauxhall)



Howarth, George (Knowsley N)
Tellers for the Noes:


Hughes, John (Coventry NE)
Mr. Michael Welsh and


Illsley, Eric
Mr. George J. Buckley.


Janner, Greville

Question accordingly agreed to.

Clause 4

INDIVIDUAL COMPANY ACCOUNTS

Amendment proposed: No. 9, in page 7, line 9, at end insert 'to this Act'.—[Mr. Redwood.]

Question put, That the amendment be made:—

The House divided: Ayes 162, Noes 42.

Division No. 343]
[9.42 pm


AYES


Alexander, Richard
Ground, Patrick


Alison, Rt Hon Michael
Gummer, Rt Hon John Selwyn


Amess, David
Hague, William


Amos, Alan
Hamilton, Neil (Tatton)


Arbuthnot, James
Hanley, Jeremy


Atkinson, David
Haselhurst, Alan


Baker, Nicholas (Dorset N)
Hayes, Jerry


Batiste, Spencer
Hay ward, Robert


Bellingham, Henry
Heathcoat-Amory, David


Bennett, Nicholas (Pembroke)
Hicks, Mrs Maureen (Wolv' NE)


Benyon, W.
Higgins, Rt Hon Terence L.


Biffen, Rt Hon John
Hind, Kenneth


Boscawen, Hon Robert
Howard, Michael


Boswell, Tim
Howells, Geraint


Bowis, John
Hunt. David (Wirral W)


Braine, Rt Hon Sir Bernard
Hunt, Sir John (Ravensbourne)


Brazier, Julian
Hunter, Andrew


Brown, Michael (Brigg &amp; Cl't's)
Irvine, Michael


Bruce, Malcolm (Gordon)
Jack, Michael


Buck, Sir Antony
Janman, Tim


Burns, Simon
Jessel, Toby


Burt, Alistair
Jones, Gwilym (Cardiff N)


Butler, Chris
Key, Robert


Butterfill, John
Kilfedder, James


Campbell, Menzies (Fife NE)
Kirkwood, Archy


Carlile, Alex (Mont'g)
Knapman, Roger


Carlisle, Kenneth (Lincoln)
Knight, Dame Jill (Edgbaston)


Carrington, Matthew
Knowles, Michael


Carttiss, Michael
Lang, Ian


Cash, William
Latham, Michael


Chalker, Rt Hon Mrs Lynda
Lester, Jim (Broxtowe)


Chapman, Sydney
Lilley, Peter


Chope, Christopher
Livsey, Richard


Clark, Sir W. (Croydon S)
Lyell, Sir Nicholas


Clarke, Rt Hon K. (Rushcliffe)
MacGregor, Rt Hon John


Coombs, Anthony (Wyre F'rest)
Maclean, David


Coombs, Simon (Swindon)
McLoughlin, Patrick


Currie, Mrs Edwina
McNair-Wilson, Sir Michael


Curry, David
Madel, David


Davies, Q. (Stamf'd &amp; Spald'g)
Mans, Keith


Davis, David (Boothferry)
Marland, Paul


Day, Stephen
Marshall, John (Hendon S)


Dicks, Terry
Martin, David (Portsmouth S)


Dorrell, Stephen
Maxwell-Hyslop, Robin


Douglas-Hamilton, Lord James
Meyer, Sir Anthony


Dover, Den
Mills, Iain


Dunn, Bob
Miscampbell, Norman


Durant, Tony
Morrison, Sir Charles


Evennett, David
Nicholls, Patrick


Favell, Tony
Nicholson, Emma (Devon West)


Fearn, Ronald
Onslow, Rt Hon Cranley


Fishburn, John Dudley
Patnick, Irvine


Fookes, Dame Janet
Pawsey, James


Forman, Nigel
Powell, William (Corby)


Forsyth, Michael (Stirling)
Redwood, John


Forth, Eric
Riddick, Graham


Fowler, Rt Hon Norman
Ridley, Rt Hon Nicholas


Fox, Sir Marcus
Ridsdale, Sir Julian


Freeman, Roger
Sackville, Hon Tom


French, Douglas
Shaw, David (Dover)


Gale, Roger
Shaw, Sir Giles (Pudsey)


Garel-Jones, Tristan
Shephard, Mrs G. (Norfolk SW)


Glyn, Dr Alan
Shersby, Michael


Goodlad, Alastair
Smith, Tim (Beaconsfield)


Goodson-Wickes, Dr Charles
Soames, Hon Nicholas


Gow, Ian
Speller, Tony


Greenway, Harry (Ealing N)
Spicer, Sir Jim (Dorset W)


Griffiths, Peter (Portsmouth N)
Steen, Anthony






Stevens, Lewis
Walters, Sir Dennis


Stewart, Andy (Sherwood)
Ward, John


Stradling Thomas, Sir John
Wardle, Charles (Bexhill)


Summerson, Hugo
Watts, John


Taylor, John M (Solihull)
Wheeler, John


Thompson, D. (Calder Valley)
Widdecombe, Ann


Thompson, Patrick (Norwich N)
Wiggin, Jerry


Thorne, Neil
Winterton, Mrs Ann


Thurnham, Peter
Winterton, Nicholas


Townsend, Cyril D. (B'heath)
Wolfson, Mark


Tracey, Richard
Wood, Timothy


Twinn, Dr Ian



Waddington, Rt Hon David
Tellers for the Ayes:


Wakeham, Rt Hon John
Mr. Greg Knight and


Wallace, James
Mr. Michael Fallon.

Question accordingly agreed to.

Schedule 1

FORM AND CONTENT OF COMPANY ACCOUNTS

Mr. Redwood: I beg to move amendment No. 10, in page 200, line 28, leave out from beginning to end of line 31.

Mr. Speaker: With this it will be convenient to discuss Government amendments Nos. 31 and 258.

Mr. Redwood: These amendments concern the Dearing report on the making of accounting standards. The House might like to know that, earlier today, in answer to a question from my hon. Friend the Member for Pembroke (Mr. Bennett) I announced that Sir Ronald Dearing has accepted an invitation to become chairman designate of the Financial Reporting Council—[Interruption.] There are some hon. Members who would like to hear this announcement.
Sir Ronald's initial task will be to negotiate with interested parties so that the new arrangements for making and enforcing accounting standards are in place by next summer. Once the body is established, it is the intention of my right hon. Friend the Secretary of State for Trade and Industry, acting jointly with the Governor of the Bank of England, to appoint Sir Ronald formally—[Interruption.]

Mr. Speaker: Would those hon. Members who are below the Gangway and do not want to participate in this debate please leave the Chamber quietly?

Mr. Redwood: I shall make that last sentence available to the House again. Once the body is established, it is the intention of my right hon. Friend the Secretary of State for Trade and Industry, acting jointly with the Governor of the Bank of England, to appoint Sir Ronald Dearing formally as chairman of the council.
Clear unambiguous accounting standards, effectively enforced, are essential to the good workings of a market economy. The report of the committee chaired by Sir Ronald has been widely welcomed as identifying the way to enhance the authority and general acceptability of accounting standards. I can think of nobody better qualified to carry through the important task of setting up the new arrangements. I am delighted that Sir Ronald has agreed to undertake that role. I have always been most impressed by the work that he has done in his various jobs.

Mr. Skinner: We should get this matter straight because we have had a lot of trouble about Alan Walters. We should be sure about where this fella stands before going any further. Will he support the Department of Trade and Industry? Will he support the Chancellor of the Exchequer or will he support the Prime Minister? Is he "one of us?" Have all those questions been answered in the positive, because if not, the Tory Government will have a lot of trouble with him. I am not worried about that and, frankly, I should like the Government to appoint somebody who would cause them a bit of trouble. However, I should like an explanation. Where does this man stand politically?

Mr. Redwood: Sir Ronald will defend the public interest as he did as a civil servant and subsequently as chairman of the Post Office. He has a fine record of public service and this job is not connected in any way with the party political dogfight in the way in which the hon. Gentleman has tried to suggest.
Amendment No. 10 changes the way in which the Bill gives effect to one of the central recommendations of the Dearing report—that directors should state in their accounts whether those accounts have been drawn up in accordance with applicable accounting standards. It implements the Committee's wish that any company departing from accounting standards should give reason why. It does not, however, also require the financial effects to be shown, as that is tantamount to saying that companies can never deviate from accounting standards narrowly defined.
Anyone concerned about the accounting practices is free to question the company at the AGM before which the accounts are laid. The Financial Reporting Council will have a duty to stop departures from accounting standards becoming a scandal. It will also be the responsibility of auditors to draw attention to any departure which causes the accounts not to give a true and fair view.
There are other reasons why the Bill in its present form is not acceptable on this point. We have argued consistently in relation to Dearing that it is important that at the end of the day standards are not given legal effect. The strength of accounting standards is that they offer a more flexible system of rules than statute can provide. We believe that a requirement to show financial effects would result in standards increasingly written and interpreted as a piece of statute law—with greater emphasis on meeting the letter rather than the spirit. Whilst we all want standards to have authority—indeed, the whole thrust of


the Dearing proposals has that end in view—I do not believe that the way to do this is to encourage greater legalism. This could all too easily shift the emphasis of accounting away from the objective of producing true and fair accounts.
The related amendment, No. 31, simply ensures that the equivalent provision for banking and insurance companies is in step.

Mr. Campbell-Savours: The Minister said that anyone has the right to question the accounting arrangements and standards of a company at its annual general meeting. Will the Minister turn his attention to the case of Mr. George and Mrs. Liz Davies, the husband and wife team who were ousted from the board of Next, the high street retailer, last December? At the annual general meeting of that company, the chairman refused to tell his shareholders about the golden handshake that was being paid to those two people, despite being pressed to do so by the shareholders. Indeed, a resolution calling for the sacking of the directors was tabled. What is the Minister's view of that case? What is the position on such a case as a result of the appointment of this gentleman who will obviously be setting new standards? Would the board of that company have been required to declare how much those two people were being paid as part of their golden handshake? What would happen now?

Mr. Redwood: We shall have to let Sir Ronald set up his Financial Reporting Council and review and establish the accounting standards that he wants. Then I would be able to answer the question whether any new provision with which he might come forward would have a bearing on that case—were history to repeat itself, which is extremely unlikely.
Amendment No. 258 would delete clause 198 from the Bill. Clause 198 was inserted in Committee——

Mr. Campbell-Savours: Will the Minister give way?

Mr. Redwood: No, I have answered the question.

Mr. Campbell-Savours: rose——

Mr. Speaker: Order. The Minister is not giving way.

Mr. Campbell-Savours: rose——

Mr. Speaker: Order. The Minister is not giving way.

Mr. Redwood: Clause 198 was inserted in Committee against the advice of my hon. Friend the then Parliamentary Under-Secretary of State for Corporate Affairs. It was put to the Committee with passion and eloquence by my hon. Friend the Member for Beaconsfield (Mr. Smith), but everyone would accept that it does not work in its present form——

It being Ten o'clock, further consideration of the Bill stood adjourned.

Question put,

That, at this day's sitting, the Companies Bill [Lords] may be proceeded with, though opposed, until any hour.—[Mr. Dorrell.]

The House divided: Ayes 157, Noes 54.

Division No. 344]
[10 pm


AYES


Alexander, Richard
Atkinson, David


Alison, Rt Hon Michael
Baker, Nicholas (Dorset N)


Amos, Alan
Batiste, Spencer


Arbuthnot, James
Bellingham, Henry





Bennett, Nicholas (Pembroke)
Jessel, Toby


Benyon, W.
Jones, Gwilym (Cardiff N)


Biffen, Rt Hon John
Key, Robert


Body, Sir Richard
Kilfedder, James


Boscawen, Hon Robert
Knapman, Roger


Boswell, Tim
Knight, Greg (Derby North)


Bowis, John
Knight, Dame Jill (Edgbaston)


Braine, Rt Hon Sir Bernard
Knowles, Michael


Brazier, Julian
Lang, Ian


Brown, Michael (Brigg &amp; Cl't's)
Latham, Michael


Buck, Sir Antony
Lester, Jim (Broxtowe)


Burns, Simon
Lilley, Peter


Burt, Alistair
Lyell, Sir Nicholas


Butler, Chris
MacGregor, Rt Hon John


Butterfill, John
Maclean, David


Carlisle, Kenneth (Lincoln)
McLoughlin, Patrick


Carrington, Matthew
McNair-Wilson, Sir Michael


Carttiss, Michael
Major, Rt Hon John


Cash, William
Mans, Keith


Chalker, Rt Hon Mrs Lynda
Marland, Paul


Chapman, Sydney
Marshall, John (Hendon S)


Chope, Christopher
Martin, David (Portsmouth S)


Clark, Dr Michael (Rochford)
Maxwell-Hyslop, Robin


Clark, Sir W. (Croydon S)
Meyer, Sir Anthony


Clarke, Rt Hon K. (Rushcliffe)
Mills, Iain


Coombs, Anthony (Wyre F'rest)
Morrison, Sir Charles


Coombs, Simon (Swindon)
Nicholls, Patrick


Currie, Mrs Edwina
Nicholson, Emma (Devon West)


Curry, David
Pawsey, James


Davies, Q. (Stamf'd &amp; Spald'g)
Powell, William (Corby)


Davis, David (Boothferry)
Redwood, John


Day, Stephen
Ridley, Rt Hon Nicholas


Dicks, Terry
Ridsdale, Sir Julian


Dorrell, Stephen
Rumbold, Mrs Angela


Douglas-Hamilton, Lord James
Sainsbury, Hon Tim


Dover, Den
Shaw, David (Dover)


Dunn, Bob
Shaw, Sir Giles (Pudsey)


Durant, Tony
Shephard, Mrs G. (Norfolk SW)


Evennett, David
Shepherd, Richard (Aldridge)


Fallon, Michael
Shersby, Michael


Favell, Tony
Smith, Tim (Beaconsfield)


Fishburn, John Dudley
Soames, Hon Nicholas


Fookes, Dame Janet
Speller, Tony


Forman, Nigel
Spicer, Sir Jim (Dorset W)


Forsyth, Michael (Stirling)
Steen, Anthony


Forth, Eric
Stevens, Lewis


Fowler, Rt Hon Norman
Stewart, Andy (Sherwood)


Fox, Sir Marcus
Stradling Thomas, Sir John


Freeman, Roger
Summerson, Hugo


French, Douglas
Taylor, John M (Solihull)


Gale, Roger
Taylor, Teddy (S'end E)


Garel-Jones, Tristan
Thompson, D. (Calder Valley)


Glyn, Dr Alan
Thompson, Patrick (Norwich N)


Goodlad, Alastair
Thorne, Neil


Goodson-Wickes, Dr Charles
Townsend, Cyril D. (B'heath)


Green way, Harry (Ealing N)
Tracey, Richard


Griffiths, Peter (Portsmouth N)
Twinn, Dr Ian


Ground, Patrick
Vaughan, Sir Gerard


Gummer, Rt Hon John Selwyn
Waddington, Rt Hon David


Hague, William
Wakeham, Rt Hon John


Hamilton, Neil (Tatton)
Walters, Sir Dennis


Hanley, Jeremy
Ward, John


Harris, David
Wardle, Charles (Bexhill)


Haselhurst, Alan
Watts, John


Hayes, Jerry
Wheeler, John


Hayward, Robert
Widdecombe, Ann


Heathcoat-Amory, David
Wiggin, Jerry


Hicks, Mrs Maureen (Wolv' NE)
Winterton, Mrs Ann


Hind, Kenneth
Winterton, Nicholas


Howells, Geraint
Wolfson, Mark


Hughes, Robert G. (Harrow W)
Wood, Timothy


Hunt, David (Wirral W)
Young, Sir George (Acton)


Hunt, Sir John (Ravensbourne)



Hunter, Andrew
Tellers for the Ayes:


Irvine, Michael
Mr. Tom Sackville and


Jack, Michael
Mr. Irvine Patnick.


Janman, Tim







NOES


Ashton, Joe
Illsley, Eric


Barnes, Harry (Derbyshire NE)
Jones, Barry (Alyn &amp; Deeside)


Barron, Kevin
Kirkwood, Archy


Brown, Ron (Edinburgh Leith)
Livsey, Richard


Campbell, Menzies (Fife NE)
Lofthouse, Geoffrey


Campbell, Ron (Blyth Valley)
McCartney, Ian


Campbell-Savours, D. N.
Mahon, Mrs Alice


Carlile, Alex (Mont'g)
Meale, Alan


Clwyd, Mrs Ann
Michael, Alun


Corbyn, Jeremy
Michie, Bill (Sheffield Heeley)


Cousins, Jim
Morris, Rt Hon A. (W'shawe)


Cox, Tom
Parry, Robert


Cryer, Bob
Patchett, Terry


Cummings, John
Pike, Peter L.


Cunliffe, Lawrence
Powell, Ray (Ogmore)


Cunningham, Dr John
Prescott, John


Dixon, Don
Primarolo, Dawn


Ewing, Mrs Margaret (Moray)
Salmond, Alex


Fearn, Ronald
Skinner, Dennis


Flynn, Paul
Spearing, Nigel


Fraser, John
Steinberg, Gerry


Galloway, George
Vaz, Keith


Gilbert, Rt Hon Dr John
Wall, Pat


Golding, Mrs Llin
Wallace, James


Hardy, Peter
Welsh, Andrew (Angus E)


Haynes, Frank



Hinchliffe, David
Tellers for the Noes:


Home Robertson, John
Mr. Michael Welsh and Mr. George J. Buckley.


Hughes, John (Coventry NE)

Question accordingly agreed to.

Bill, as amended, (in the Standing Committee), again considered.

Mr. Redwood: I should explain to the hon. Member for Workington (Mr. Campbell-Savours) that Sir Ronald Dearing could make changes to accounting standards once the council is up and running. There is also a legal requirement to reveal compensation to directors who lose office, and that would appear in the accounts following the events in question.
Amendment No. 258 will delete clause 198. As most accept, the clause does not work in its present form and must either be deleted or substantially revised. Clause 198 is directed at enabling the Secretary of State to delegate his power to order accounting provisions in the Act by regulation through a statutory financial reporting council. I acknowledge that the new clause does not require the Secretary of State to delegate his powers. None the less, it would be wrong in principle for the Government to support the inclusion of such a provision unless they thought it right to devolve such powers. Therefore, I ask the House to remove it from the Bill.

Mr. Campbell-Savours: In the light of that reply, does the Minister think that legal action should be taken in the case of a company that refuses to reveal how much was paid? What is the position legally?

Mr. Redwood: There is already a legal requirement that the information be published in the report and accounts concerning the year in which the events took place.

Mr. Hanley: I should declare my interest as the parliamentary adviser to the Institute of Chartered Accountants in England and Wales. I add to the words of welcome to my hon. Friend the Member for Wokingham (Mr. Redwood). He may feel as if he has already been in the post for years and years. He brings a wealth of experience to his task, which he has already shown this evening, and he has approached his task in a most

constructive way. It is a great shame that activities completley unconnected with the Bill are proving more than a hiccup.
10.15 pm
I welcome the success of my hon. Friend the Minister in securing the appointment of Sir Ronald Dearing. We are all extremely fortunate to have secured him for such an important task. We look forward to observing the way in which he tackles the job in the months ahead.
Paragraph 7 of schedule 1 introduces a requirement for companies to disclose and explain any material departure from accounting standards. That requirement is imposed in the explanatory foreword to "Accounting Standards". Its incorporation in statute implements one of the recommendations of Sir Ronald Dearing's report.
New paragraphs 36A(2) and (3) bring into statute further requirements of the explanatory foreword. These are to disclose the financial effects of any departure from standards, unless this would be impracticable, and to explain any non-disclosure. Unfortunately, Government amendment No. 10 removes these requirements. I feel that that is a step backwards. If the requirements of the explanatory foreword are deliberately removed from the Bill while others are left standing, it may be difficult to enforce compliance in future. The status of accounting standards will thereby be reduced. Users of accounts will also be deprived of helpful information that would enable them to calculate what the figures would have looked like had the company followed accounting standards.
It follows from what my hon. Friend the Minister said that he should consider in the months ahead—I do not feel that this is a matter that should divide the House—whether the extra information, which according to "Accounting Standards" should be provided for shareholders so that they are able to consider whether the departure was valid and to quantify exactly what the accounting might have been had accounting standards been adhered to, should be made available. I feel that the information is important and should be included in future. Opportunities for comparisons with other companies will be reduced if the requirements are removed. After all, it is the removing of disparity of accounting treatment that has created the accounting standards programme. The removal of disparity is best able to be seen if we can quantify the departures from accounting standards.

Mr. John Garrett: The Opposition also welcome the appointment of Sir Ronald Dearing. He has been a most distinguished public servant both in the Civil Service and as the head of the Post Office. I understand that he is also the chairman of the Durham development corporation. That must be another reason for giving preferment.
The amendments embody our proposals that the reasons for any departures from accounting standards in company accounts must be stated in the annual report and accounts. They delete, however, the necessity to state the financial effects of departures. We fear that in the long run this may prove to be a weakness. In the explanatory foreword to "Statements of Standard Accounting Practice" it is required that the auditors should state the financial effects of departures if that is the decision of the accounting standards board. On the whole, it will be a weaker requirement than we would have wished for, but at least the amendment goes a significant way towards opening up the whole question of departures from


accounting standards. We are willing to put up with that inconsistency until Sir Ron, in the fullness of time, produces new directives.
Amendment No. 258 deletes the amendment successfully proposed by the hon. Member for Beaconsfield (Mr. Smith) about the formation of the Financial Reporting Council. As the Minister said, the amendment was faulty because the schedule accompanying it, which set out the constitution of the FRC, was not accepted by the Committee. The hon. Gentleman's proposals were weaker than those that we had in mind, which were for a statutory body concerned with the supervision both of accounting standards and the auditing profession—something that will come in the fullness of time. We were not entirely sold on the amendment. Eventually there will have to be some regulation covering the auditing profession. It is a large, multinational business; it no longer consists of a cottage industry with small groups of Scottish accountants, as it did when it started the better part of 100 years ago. They are enormous companies, they do not provide accounts, they are secretive in the way that they go about their business and we know little about them.
The appointment of Sir Ron is a reasonable start and we wish him well. We look forward to—

Mr. Skinner: I am just beginning to piece together what my hon. Friend has been saying about accounting and auditing. As the Bill began its passage some time ago, before the Ferranti—International Signal and Control fraud with the £200 million rip-off by the company and Mr. James Guerin, I wonder whether the new provisions—and my hon. Friend is not too happy with them—will help such companies to ensure that they are not ripped off. My guess is that some taxpayers' money could be used, through inflated contracts or some other method, to assist those companies through their problems. Can my hon. Friend inform us whether the conditions for auditing and accounting would fit the bill or whether the passage of time means that they need to be even stronger?

Mr. Garrett: My understanding is that the case currently being investigated by the serious fraud office relates to the gullibility of the Ferranti board in connection with certain contracts entered into by a company that it acquired in another country. To that extent, I do not think that the question of accounting standards is involved. In the initial stages, we cannot put these issues before Sir Ron and his Financial Reporting Council.

Mr. Skinner: I understand that a set of accountants were advising Ferranti, that those accountants were resident in this country and that they told Ferranti that ISC had a clean bill of health. If that is the case, those accountants were seriously at fault in telling Ferranti that it could go ahead. If that is proved by the investigations of the serious fraud office, it shows that there is something wrong with the way in which so-called professional auditors go through a company's books very quickly and enable a company, which attracts a great deal of taxpayers' money through defence contracts, to be milked by a bogus company in America. A British set of accountants, albeit acting at a multinational level, gave Ferranti very bad advice.

Mr. Garrett: My hon. Friend is putting me in the position of a Minister having to answer for the conduct of Government policy on the question of accountants——

Mr. Skinner: My hon. Friend will be in that position soon.

Mr. Garrett: Perhaps I will, but these matters should be addressed to the Minister. Perhaps my hon. Friend can ask his questions in a subsequent debate that will arise shortly. I cannot tell him whether the valuation of ISC was carried out by auditors at the request of the Ferranti board and whether those auditors behaved improperly. Perhaps the Minister has a view on that matter as it has been referred to the serious fraud office. I cannot pass an opinion on that.
I think that, eventually, the council that Sir Ron will head will have to take into account the conduct, behaviour and practice of auditing in general, in addition to the supervision of accounting standards with which it is presently charged. However, that is not the subject of this part of the Bill. If my hon. Friend wishes to raise the question of fraud, there is another part concerned with investigation: no doubt the Minister will be able to give an answer when we deal with that. I hope that that puts my hon. Friend's mind at rest for the time being.

Mr. Skinner: The more I think about it, the more I recognise the Bill's importance in connection with another company in Britain that has run into serious trouble connected with homes. The ex-chairman of the 1922 Committee, Sir Edward du Cann, was involved: he was a non-executive director who ran away from the firm very quickly when he could see the so-and-so hitting the fan, as did many others.
It seems to me that the auditors are not doing their job very well. I wonder whether my hon. Friend believes that these clauses, and Ron Dearing's appointment, can ensure that those abscesses on the body politic—or the company politic—can be cleaned up by the new provision.
I hold the simplistic view that they cannot be cleaned up. This is all about making money, exploiting someone else, doing it as fast as possible and using a shady set of accountants to get it through. What worries me is whether, when the legislation is passed, it will be any good: will we have sorted out the accountants, or will it be in the pocket of companies which seem not to pay a blind bit of notice to all the corruption that is taking place in the City?

Mr. Garrett: The short answer is no. The Financial Reporting Council and its chair, Sir Ron Dearing, will not have any jurisdiction over auditors or auditing. What they are trying to do is improve the quality of information given to company shareholders in company accounts, under a set of rules that govern the way in which such things are calculated. The idea is to clarify company accounts. That is the relatively narrow front on which we are operating at present.
My hon. Friend invites me to go further. The point behind our proposal that the council should cover not only accounting and accounting standards but the conduct of the auditing profession would, I think, enable at least the public—the investors, consumers, banks and creditors—to establish rather better the performance of the auditing profession, which is relatively unregulated and very secretive.

Mr. Hanley: It is self-regulation.

Mr. Garrett: The spokesman for the Institute of Chartered Accountants says that it is self-regulation. That is not satisfactory, as we know from the number of actions


taken against auditors. I believe that the Government themselves are taking action against the auditors of De Lorean. These scandals are becoming more common, and this part of the Bill does not address them.

Mr. Tim Smith: I, too, support and welcome the appointment of Sir Ron Dearing as chairman of the Financial Reporting Council. It is now 13 months since he published his report on the making of accounting standards, and I commend the Department on the way in which it has responded all the way along—first with its consultative document in January, and now with Sir Ron's appointment.
There is scope for improvement in the quality of financial reporting. The hon. Member for Norwich, South (Mr. Garrett) is quite right: the difficulty in the past has been securing compliance with accounting standards when the whole process was largely one of self-regulation. The great step forward was the new paragraph 36A, which appears on page 200 of the Bill and states for the first time in statute law that companies must state whether accounts have been prepared
in accordance with applicable accounting standards".
It goes on to say:
particulars of any material departure from those standards … shall be given.

As a result of the change that was made in Committee, not only the particulars but the reasons will now have to be given. My hon. Friend the Minister explained why he could not go all the way and accept the full import of that. I understand that there is concern that we would be giving accounting standards legal form. Giving them legal recognition is a great step forward, and, in due course, with the new Financial Reporting Council, under Sir Ronald Dearing's chairmanship, that will lead to an improvement in financial reporting, which is the subject of our debate.
10.30 pm
Of course I am sorry that the Government could not accept my proposal that the Secretary of State should send a delegation to the FRC, but I recognise that the clause as drafted is defective because it should have been accompanied by a schedule, so I understand why my hon. Friend has decided that it should be left out.
I said in Committee that, in the long run at any rate, it might be sensible to ask the same body to look after, supervise and regulate not only accounting standards but the content of company accounts. In practice, the dividing line between the two is not particularly clear cut. Perhaps my hon. Friend should consider the possibility of giving the same body responsibility for the entire contents of a company's accounts.

Mr. Cousins: I add my congratulations to Sir Ronald Dearing on his new appointment. Many of us remember him at the DTI in Newcastle as regional director for the Northern region back in the 1970s. He was subsequently exiled to the Post Office and we welcome his return to a more normal existence and to the position he holds in County Durham. My personal hope is that he will end his career as a member of Durham county council, which, as some of us recognise, is the most august elected body in the United Kingdom.
The Minister is making a grave mistake in attempting to unpick the compromise that was made in Committee. He would have been far wiser had he fleshed out the free-standing clause giving the Financial Reporting Council the power that he is now removing. We all accept that the necessary additions were not made to make the clause operative. Nonetheless the Minister had that option and it is a great pity that he did not exercise it. It is quite certain that when the Financial Reporting Council under the leadership of Sir Ronald Dearing gets into business many of the pressures towards rationalising the mixed economy of regulation in accountancy and accounting standards will prove quite unstoppable.
The current position is extremely confused. At various points in the Bill review bodies are set up by statute which have, if not legal force, quasi-legal powers which substitute for previous powers that were actionable in court.
Tonight's attempt to unpick the compromise made in Committee will prove unfortunate. It does not get the Minister off to a particularly good start, although, obviously, we wish him well in the short time that remains to him and his colleagues. This matter will not stand still. The attempt to reverse the process that started in Committee of providing a properly-regulated authority over accountancy, accountancy practices and accountancy standards cannot be held up.
The Government's amendment is particularly unfortunate as it does not reflect the spirit of our discussions in Committee. If the Government's amendments are carried tonight, the Bill will be an even bigger mess containing various streams of thought about how to deal with the problem, none of which is carried to a perfect, well-elaborated solution.
It is a great regret that the Government have chosen to unpick the work carried out in Committee. I do not believe that their attempts to hold up the irresistible movement towards proper regulation of accountancy and accounting standards will be effective, and in a very short time we shall be back here discussing precisely the same problems with a further trail of incidents such as the one to which my hon. Friend the Member for Bolsover (Mr. Skinner) referred tonight, and we shall have to consider the matter again. It would have been far better and wiser if the Minister had rolled with the punch and reflected the consensus of the Committee by accepting the amendments that were passed with the support of Conservative and Opposition Members. To attempt to unpick the compromise that was achieved in Committee is to retreat on something that ultimately will prove unstoppable.

Mr. Campbell-Savours: I wish to add my congratulations to Sir Ronald Dearing on his new appointment.
I want to follow the remarks of the hon. Member for Beaconsfield (Mr. Smith), who, as I understand it, argued that Sir Ronald Dearing's remit should be extended beyond an examination of accountancy practices and

standards to the wider question of financial reporting of company accounts and the form that those accounts take when they are presented at annual general meetings.
In an intervention, I raised the case of a company that was reported in the Financial Times on 26 May. I wish to comment on the article because I believe that it goes to the heart of the debate. It shows deficiencies in how accounts are presented at annual general meetings. I should like a ministerial assurance that these matters will be dealt with by Sir Ronald Dearing when he takes over his new role.
The article refers to a settlement for
Mr. George and Mrs. Liz Davies, the husband-and-wife team ousted last December from their positions of chairman and product director at Next",
which I understand is a retail group that sells clothes—[Interruption.] Some of us do not spend our time shopping in the west end—[Interruption.] Next has not made my patch yet, although I am sure that it will come in time—[Interruption.] I am prepared to take interventions if hon. Members wish to intervene and formalise matters for the Official Report. The article continues:
Mr. Murray Gordon, executive chairman of Combined English Stores until its takeover by Next and now chairman of Era Group, asked about the amount"—
the amount of compensation paid to Mr. and Mrs. Davies—
to be told that a settlement had indeed been made but would not be disclosed as it was subject to a confidentiality agreement.
Furthermore, shareholders were told' that no provisions would be made"—
this answers the point that the Minister was making about matters not having to be reported in the current financial year—
in the 1989, 1990 or 1991 group accounts in respect of any settlement.
Obviously, there was no intention to publish information about the compensation paid, which runs to quite a substantial sum of money.
The article continues:
Mr. Robin Adshouse, an analyst at Kitkat and Aitken, suggested that Next had settled with Mr. Davies within his contract of employment, and that that kind of non-disclosure was the 'thin end of the wedge for shareholders' democracy'.
Mr. Gordon and Mr. Pat Hammond-Turner, one-time assistant managing director of CES, both voted against the re-election of the directors.
It is significant that the journalist draws attention to that, because earlier this evening I argued that voting against the re-election of directors did not meet the concerns being expressed by my hon. Friends. In the case of Next, such voting does not appear to have had any effect.
If Sir Ronald Dearing's remit can be extended in the way that the hon. Member for Beaconsfield suggested, will it be possible to ensure that such information is published in the accounts that are presented at annual general meetings? Shareholders at annual general meetings are entitled to know what large sums of money are being paid in what, in effect, are golden handshakes to departing directors. In the case I mentioned, the directors may have been required to leave or left for perfectly decent and honourable reasons, but there are occasions on which people leave companies or are required to leave for what I can only describe as dishonourable reasons. They may have had their hands in the till and the shareholders or the directors want rid of them. Clearly, that did not happen in this case. I should like to be assured that shareholders have the right to know the facts.

Mr. Redwood: I might be able to speed up proceedings by pointing out to the hon. Gentleman that in the Companies Act 1985 there is a clear requirement to show the aggregate amount of any compensation to directors or past directors in respect of loss of office. If the hon. Gentleman thinks that any accounting violation has occurred in reports and accounts filed for the relevant year in which that happened, he should let me know at my office and we will obviously see what the facts are.

Mr. Campbell-Savours: In the light of what the Minister has said, perhaps it will be noted by the shareholders of that company that I have raised this matter on the Floor of the House tonight. Perhaps they will note also that the Minister has replied to me and expressed an interest in so far as if it is true that the directors of the company have made it clear that they do not intend to reveal the information in the years 1989, 1990 and 1991 they would have a case to draw to the attention of the Department and may have the basis for a legal action.

Mr. Hanley: We had a discussion about this matter in Committee. I raised the point that if benefits in kind, such as occupation of property and so on, form part of compensation, there is a current loophole in the law. The then Minister said that he would plug that loophole. The Government have done so in an amendment which we hope that we will be able to discuss one day. That applies to compensation in benefits in kind other than money. The clause is not only already tight and prescribed in the existing statute, it is made even tighter by our discussions on this Bill. I am sure that the newspaper report must be wrong, and, if not, action should be taken.

Mr. Campbell-Savours: It might be wrong, but I have another report from The Independent of 27 May this year. It states:
The conflict between the two sides
that being clearly the representatives of the shareholders, that is to say the board of the company, and the two departing directors—
has been resolved but neither side has any intention of disclosing the details of the settlement and have sworn each other to secrecy as a condition of the deal.
From what the Minister is saying, that is not possible, and he is being backed by his hon. Friend the Member for Richmond and Barnes (Mr. Hanley). The article goes on to state:
The Companies Act 1985 states clearly that it is unlawful for a company to make to a director any payment by way of compensation for loss of office without disclosing information on the proposed payment including its amount to shareholders.
Michael Stoddard, the new chairman of Next, told shareholders at the annual general meeting on Thursday that no provision in connection with the settlement of the Davies affair had been made in the accounts for the year ended 31 January and none was required for the current year.
If Slaughter and May, advising Next, have discovered some way around the provisions of company legislation—assuming something of value is changing hands which seems likely"—
which is what the hon. Member for Richmond and Barnes was coming to—
then Next shareholders are right to be unimpressed by such a display of legal ingenuity. And they should be concerned about the quality of information they are receiving.
I am trying to establish that Sir Ronald Dearing, whose experience is eminent and impressive, will make it clear to all companies that that conduct is quite unacceptable. When shareholders demand that kind of information, they

should receive it. They should not be misled at annual general meetings. They are entitled to know what is happening. The money being paid out is, in effect, theirs—unless it should otherwise have been paid to the work force for some reason. In effect, the money is the property of the company. The Minister has clarified the position tonight. I hope that Sir Ronald Dearing impresses that principle upon the auditors and the accounting profession generally to ensure that reports like those to which I have referred do not appear in national newspapers and cause great concern to shareholders.

Mr. Bob Cryer: I want to comment on this appointment. No doubt Ron Dearing has what is generally regarded to be an eminent record. I am not sure whether eminent people should be members of scrutiny bodies. Eminent people have been members of councils throughout the land. We hear that Ron Dearing is OK and that he has done a good job at the Post Office. He was a senior civil servant at the Department of Trade and Industry for several years when Sir Keith Joseph was at that Department. Sir Keith is now an eminent Member of the other place and he appointed Ron Dearing as chairman of the Post Office.
I am not sure whether people who spend their lives among the councils and behind the closed doors of Whitehall will scour out information and cause a fuss when things go wrong. Their lives have not been like that. They are more used to saying to Ministers, "Look Minister, there's going to be a bit of trouble here unless you take evasive action". I am not overwhelmed by the notion that Sir Ron Dearing will bring some fire and brimstone to this office following the repeated scandals that have erupted in the City of London week in week out over the past few years.
I believe that Ron Dearing would be better than someone like Sir Peter Carey who was permanent secretary at the DTI when Ron Dearing was there. As soon as Sir Peter Carey left the DTI, he cleared off to as many boards as he could lay his hands on. At least Ron Dearing has kept some sense of public service, unlike many other senior civil servants who clear off to as many boards as possible in a way that raises questions as to what they were doing before they were appointed to those boards. Questions have been raised about that.
Before the Government came to office in 1979, they said that they would end the quangos. I believe that if we are to have those quangos, they should comprise people who will pay attention to irregularities where they happen. The members of the Financial Reporting Council have not yet been appointed. They are the Secretary of State's appointees and they are not likely to be radical members of our community. Indeed, they are produced by the Civil Service in any case from a list of the great and the good. When I was a Minister, I tried to get hold of that list and held inquiries with civil servants to find out where they got the names from and I came up against a blank wall. It was impossible to define how people received that patronage. The patrons are the senior civil servants who suggest things to Ministers and they make the appointments.
Why not advertise for applicants for those jobs? What is wrong with that? By all means there could be a board within the Civil Service with the Minister present to make a judgment. All the other high quality jobs elsewhere in the


giant corporations are advertised and interviews are held. If we are appointing national bodies, even if they are quangos, we should adopt a different technique from the civil servants simply suggesting names to the Minister.
The company report published by Private Eye could provide the advice needed. In issue after issue that magazine publishes information of great value. In 1973–74, when the Poulson scandal was bubbling, it was Private Eye that dared to set it all out although other papers tried to take the credit. That magazine has a good track record of exposing the seamier side of the City and it could be of great help.
What about Paul Foot of the Daily Mirror?

Mr. Nicholas Winterton: Thank you very much.

Mr. Cryer: Of course "Thank you very much". We want someone at whom Tory Members will raise their eyebrows. We want them to say, "Oh. Isn't it a shocking affair appointing someone like that." But like what? Paul Foot exposes scandals in the Daily Mirror and I should have thought that that was a good background for the job. Concern for the public good is his motivating force.
What about Norman Atkinson who was a distinguished Member of this House for many years? He has a good track record of questioning and probing Ministers and has the public concern at heart.

Mr. William Cash: What about Eric Varley?

Mr. Cryer: He is not a suitable person. I know that he is resting at the moment—he has been deselected—but he has been too close to the Establishment. I mentioned Norman Atkinson on the basis that he was a Back Bencher who spent his life probing and cross-examining.
Perhaps the Minister will be able to tell us who is up for consideration. They are likely to be pillars of the Establishment who will opt for a quiet life. If they cause a few ripples, that will upset the Establishment of which they are a part. If I have suggested a few names that have raised eyebrows that is all well and good.

Mr. Cash: Does the hon. Gentleman acknowledge that just lurking in the background, behind the pillars of the establishment of the Labour party, there is a degree of patronage in the recommendation of Norman Atkinson rather than Eric Varley? Are their credentials determined by the degree to which they move leftwards towards Marxism?

Mr. Cryer: That is a legitimate question and I shall not make a judgment. The Secretary of State, however, will make such a judgment behind closed doors in Whitehall. In what sense will the right hon. Gentleman be accountable to the House and to the public?
Anyone who feels that he is able to do the job and has the qualifications needed should apply. If Eric Varley or Norman Atkinson want to apply, so be it. I suggested the sort of people who would be overlooked and ignored because of their background of challenging the Establishment.

Mr. Nicholas Winterton: What about me?

Mr. Cryer: After the next election the hon. Gentleman will be looking for a job and he may want to apply. The hon. Gentleman displays an anti-Establishment attitude, which is certainly not confined to the Labour Benches, but

I like to think that there are many more people who hold anti-Establishment attitudes on the Labour Benches. The parliamentary Labour party has as its driving force the public good.
The Secretary of State will make the appointments and no doubt he will receive a report, but there will he no statutory obligation on the right hon. Gentleman to make a report to the House. However, there should be such a report so that we can have an opportunity to debate it, because that in itself is an element of accountability. We often push to one side and forget that Parliament is an important element in public accountability. The fact that there is a requirement to produce a report will be at the back of the council's mind and it will be speeded on in its task by the knowledge that its work will be subject to dissidence in the House of Commons. That will help it to ensure that it is doing its job, which is no bad thing. Indeed, it is part of the job that this place is supposed to carry out.
I hope that the Minister will be able to say that the reporting council will report to the Secretary of State and that those reports will be placed before us for proper scrutiny, debate and examination.

Mr. Redwood: I am glad that with only one dissenting voice the House has accepted that Sir Ronald Dearing is a good choice for this post. I am sure that he will be delighted to read later this week that he has received the acclaim of the Government, Conservative Back Benchers and the official Opposition. Sir Ronald commands great respect for the work that he has done in the past. I am sure that he will bring to this task a great deal of energy, objectivity and independence of mind. My memory may be playing tricks, but I believe that he started in the Civil Service with a humble role as a clerical officer and worked his way up. I hope that in all ways his credentials will meet with approval from Opposition Members.
The House has welcomed the Government's move towards the position identified in Committee by Opposition and Conservative Back-Bench Members in wanting to state the reasons for any departures from accounting standards. I offer that because the Commitee produced some good points and the case was well argued. That is the purpose of this amendment.
However, I hope that the House will understand my belief that quantifying the departures would be going too far as it would give legal form to standards, which we do not wish to do, and would make departures from standards impossible. What would be the point of ever departing from standards if one had to quantify the exact consequence of so doing?
The safeguard for the shareholders and others who are interested in the matter are that the reasons for departing will have to be stated. That means that the matter will be highlighted and come out in debate at the annual general meeting before the approval of the accounts if people feel that is a matter of concern. Of course, it would also be a matter for debate between analysts in the company and the large investors and the company if it is felt that the company is beginning to depart too far from those agreed standards.
I turn now to the point made by my hon. Friend the Member for Richmond and Barnes (Mr. Hanley) about comparisons being difficult if some companies choose to depart from the standards. It is a matter of degree rather than a black and white issue. The application of standards


is already difficult. Many areas require the exercise of judgment, as many hon. Members with accounting experience will know. The valuation of stock is always difficult. Provisions on long-term contracts in particular are hazardous to get right and funding pension rates can be difficult to get right actuarially in the light of changing market circumstances. There are a number of areas in which there are standards, but where it is difficult to make judgments. Therefore, it is always tricky to compare one company with another because some companies are more prudent and others less prudent in their calculations of profit or balance sheet values, which is quite permissible even in the framework of standards.
I should be reluctant to delegate law-amending powers to the FRC. It would be unprecedented to give a private body the power to amend legislation. That should remain a matter for debate between the Government and Opposition in the House and it should be for the Government to propose any changes in the legislative framework affecting accounts that may be deemed necessary in future.
Ferranti has been mentioned several times. I do not think that that is a standards issue, or that it relates to this debate. I agree with the views expressed by the hon. Member for Norwich, South (Mr. Garrett).
I turn finally to the issue of Next, which was raised by the hon. Member for Workington (Mr. Campbell-Savours). I was surprised that he had never seen a Next shop as Next was one of the most successful chains of stores in the early and middle '80s and can be seen in most high streets. I stand by what I said to him earlier. If the hon. Gentleman thinks that a problem has arisen in the accounts, as published, in the light of the nature of the statute concerning the requirements, he should write to my office and we will look into it.

Mr. Campbell-Savours: rose——

Madam Deputy Speaker: Order. I cannot call the hon. Gentleman a second time, as he appreciates.

Question put, That the amendment be made:—

The House divided: Ayes 137, Noes 27.

Division No. 345]
[10.59 pm


AYES


Alexander, Richard
Campbell, Menzies (Fife NE)


Alison, Rt Hon Michael
Carlile, Alex (Mont'g)


Amos, Alan
Carlisle, John, (Luton N)


Arbuthnot, James
Carlisle, Kenneth (Lincoln)


Arnold, Jacques (Gravesham)
Carrington, Matthew


Ashby, David
Carttiss, Michael


Ashdown, Rt Hon Paddy
Cash, William


Atkinson, David
Chapman, Sydney


Baker, Nicholas (Dorset N)
Chope, Christopher


Batiste, Spencer
Clark, Dr Michael (Rochford)


Beith, A. J.
Clarke, Rt Hon K. (Rushcliffe)


Bellingham, Henry
Coombs, Anthony (Wyre F'rest)


Bennett, Nicholas (Pembroke)
Coombs, Simon (Swindon)


Biffen, Rt Hon John
Currie, Mrs Edwina


Boswell, Tim
Curry, David


Bowis, John
Davis, David (Boothferry)


Brazier, Julian
Day, Stephen


Brown, Michael (Brigg &amp; Cl't's)
Dorrell, Stephen


Bruce, Malcolm (Gordon)
Douglas-Hamilton, Lord James


Buck, Sir Antony
Dover, Den


Burns, Simon
Dunn, Bob


Burt, Alistair
Durant, Tony


Butcher, John
Evennett, David


Butterfill, John
Fallon, Michael





Favell, Tony
Mans, Keith


Fearn, Ronald
Marshall, John (Hendon S)


Fishburn, John Dudley
Martin, David (Portsmouth S)


Forman, Nigel
Maxwell-Hyslop, Robin


Forsyth, Michael (Stirling)
Meyer, Sir Anthony


Forth, Eric
Mills, Iain


Freeman, Roger
Nicholls, Patrick


Gale, Roger
Nicholson, Emma (Devon West)


Garel-Jones, Tristan
Pawsey, James


Glyn, Dr Alan
Redwood, John


Goodlad, Alastair
Ridley, Rt Hon Nicholas


Goodson-Wickes, Dr Charles
Sackville, Hon Tom


Griffiths, Peter (Portsmouth N)
Shaw, David (Dover)


Gummer, Rt Hon John Selwyn
Shaw, Sir Giles (Pudsey)


Hague, William
Shephard, Mrs G. (Norfolk SW)


Hamilton, Hon Archie (Epsom)
Shepherd, Richard (Aldridge)


Hamilton, Neil (Tatton)
Smith, Tim (Beaconsfield)


Hanley, Jeremy
Soames, Hon Nicholas


Harris, David
Speller, Tony


Hayes, Jerry
Stevens, Lewis


Hayward, Robert
Stewart, Andy (Sherwood)


Hind, Kenneth
Stradling Thomas, Sir John


Howarth, G. (Cannock &amp; B'wd)
Summerson, Hugo


Howe, Rt Hon Sir Geoffrey
Taylor, John M (Solihull)


Howells, Geraint
Taylor, Teddy (S'end E)


Hughes, Robert G. (Harrow W)
Thompson, D. (Calder Valley)


Hunt, David (Wirral W)
Thompson, Patrick (Norwich N)


Hunt, Sir John (Ravensbourne)
Thorne, Neil


Hunter, Andrew
Thurnham, Peter


Irvine, Michael
Townsend, Cyril D. (B'heath)


Jack, Michael
Tracey, Richard


Janman, Tim
Twinn, Dr Ian


Jessel, Toby
Waddington, Rt Hon David


Jones, Gwilym (Cardiff N)
Wallace, James


Kirkwood, Archy
Ward, John


Knapman, Roger
Wardle, Charles (Bexhill)


Knight, Greg (Derby North)
Watts, John


Knight, Dame Jill (Edgbaston)
Wheeler, John


Knowles, Michael
Widdecombe, Ann


Lang, Ian
Winterton, Mrs Ann


Latham, Michael
Winterton, Nicholas


Lester, Jim (Broxtowe)
Wood, Timothy


Lilley, Peter



Livsey, Richard
Tellers for the Ayes:


Lyell, Sir Nicholas
Mr. Irvine Patnick and Mr. David Heathcoat-Amory.


Maclean, David



McLoughlin, Patrick





NOES


Barnes, Harry (Derbyshire NE)
Jones, Ieuan (Ynys Môn)


Campbell-Savours, D. N.
Mahon, Mrs Alice


Cousins, Jim
Michie, Bill (Sheffield Heeley)


Cox, Tom
Nellist, Dave


Cryer, Bob
O'Neill, Martin


Cummings, John
Pike, Peter L.


Davies, Rt Hon Denzil (Llanelli)
Powell, Ray (Ogmore)


Ewing, Mrs Margaret (Moray)
Salmond, Alex


Flynn, Paul
Skinner, Dennis


Godman, Dr Norman A.
Smith, Rt Hon J. (Monk'ds E)


Hardy, Peter
Welsh, Andrew (Angus E)


Haynes, Frank



Hinchliffe, David
Tellers for the Noes:


Hughes, Robert (Aberdeen N)
Mr. Michael Welsh and Mr. Ronnie Campbell.


Illsley, Eric



Jones, Barry (Alyn &amp; Deeside)

Question accordingly agreed to.

Amendment proposed: No. 11, in page 200, line 35, at end insert—

'Loans in connection with assistance for purchase of company's own shares

8A. In paragraph 51(2) (disclosure of outstanding loans in connection with certain cases of financial assistance for purchase of company's own shares), after "153(4)(b)" insert ",(bb)".'.—[Mr. Redwood.]

Question put, That the amendment be made:—

The House divided: Ayes 128, Noes 34.

Division No. 346]
[11.12 pm


AYES


Alexander, Richard
Howe, Rt Hon Sir Geoffrey


Alison, Rt Hon Michael
Howells, Geraint


Amos, Alan
Hughes, Robert G. (Harrow W)


Arbuthnot, James
Hunt, David (Wirral W)


Arnold, Jacques (Gravesham)
Hunt, Sir John (Ravensbourne)


Ashby, David
Hunter, Andrew


Ashdown, Rt Hon Paddy
Irvine, Michael


Atkinson, David
Jack, Michael


Baker, Nicholas (Dorset N)
Janman, Tim


Batiste, Spencer
Jessel, Toby


Beith, A. J.
Jones, Gwilym (Cardiff N)


Bellingham, Henry
Kirkwood, Archy


Bennett, Nicholas (Pembroke)
Knapman, Roger


Biffen, Rt Hon John
Knight, Greg (Derby North)


Boswell, Tim
Knight, Dame Jill (Edgbaston)


Bowis, John
Knowles, Michael


Brazier, Julian
Lang, Ian


Brown, Michael (Brigg &amp; Cl't's)
Latham, Michael


Bruce, Malcolm (Gordon)
Lester, Jim (Broxtowe)


Buck, Sir Antony
Lilley, Peter


Burns, Simon
Livsey, Richard


Burt, Alistair
Lyell, Sir Nicholas


Butterfill, John
Maclean, David


Campbell, Menzies (Fife NE)
McLoughlin, Patrick


Carlisle, Kenneth (Lincoln)
Mans, Keith


Carrington, Matthew
Marshall, John (Hendon S)


Carttiss, Michael
Martin, David (Portsmouth S)


Cash, William
Maxwell-Hyslop, Robin


Chapman, Sydney
Meyer, Sir Anthony


Chope, Christopher
Mills, Iain


Clark, Dr Michael (Rochford)
Nicholls, Patrick


Clarke, Rt Hon K. (Rushcliffe)
Nicholson, Emma (Devon West)


Coombs, Anthony (Wyre F'rest)
Redwood, John


Coombs, Simon (Swindon)
Ridley, Rt Hon Nicholas


Currie, Mrs Edwina
Sackville, Hon Tom


Curry, David
Shaw, David (Dover)


Davis, David (Boothferry)
Shaw, Sir Giles (Pudsey)


Dorrell, Stephen
Shephard, Mrs G. (Norfolk SW)


Douglas-Hamilton, Lord James
Smith, Tim (Beaconsfield)


Dover, Den
Soames, Hon Nicholas


Dunn, Bob
Speller, Tony


Durant, Tony
Stevens, Lewis


Evennett, David
Stewart, Andy (Sherwood)


Favell, Tony
Stradling Thomas, Sir John


Fearn, Ronald
Summerson, Hugo


Fishburn, John Dudley
Taylor, John M (Solihull)


Forman, Nigel
Thompson, D. (Calder Valley)


Forsyth, Michael (Stirling)
Thompson, Patrick (Norwich N)


Forth, Eric
Thorne, Neil


Freeman, Roger
Thurnham, Peter


Gale, Roger
Townsend, Cyril D. (B'heath)


Garel-Jones, Tristan
Tracey. Richard


Glyn, Dr Alan
Twinn, Dr Ian


Goodlad, Alastair
Waddington, Rt Hon David


Goodson-Wickes, Dr Charles
Wallace, James


Griffiths, Peter (Portsmouth N)
Ward, John


Gummer, Rt Hon John Selwyn
Wardle, Charles (Bexhlll)


Hague, William
Warren, Kenneth


Hamilton, Hon Archie (Epsom)
Watts, John


Hamilton, Neil (Tatton)
Wheeler, John


Hanley, Jeremy
Widdecombe, Ann


Harris, David
Wood, Timothy


Hayward, Robert



Heathcoat-Amory, David
Tellers for the Ayes:


Hind, Kenneth
Mr. Irvine Patnick and


Howarth, G. (Cannock &amp; B'wd)
Mr. Michael Fallon.




NOES


Barnes, Harry (Derbyshire NE)
Flynn, Paul


Buckley, George J.
Galloway, George


Campbell-Savours, D. N.
Godman, Dr Norman A.


Cousins, Jim
Golding, Mrs Llin


Cryer, Bob
Haynes, Frank


Cunliffe, Lawrence
Hinchliffe, David


Dewar, Donald
Hughes, John (Coventry NE)


Dixon, Don
Illsley, Eric


Dobson, Frank
Jones, Ieuan (Ynys Môn)


Ewing, Mrs Margaret (Moray)
Lofthouse, Geoffrey





Mahon, Mrs Alice
Vaz, Keith


Meale, Alan
Welsh, Andrew (Angus E)


Michie, Bill (Sheffield Heeley)
Welsh, Michael (Doncaster N)


Nellist, Dave
Wilson, Brian


Pike, Peter L.
Wray, Jimmy


Prescott, John



Salmond, Alex
Tellers for the Noes:


Skinner, Dennis
Mr. John Cummings and Mr. Ronnie Campbell.


Spearing, Nigel

Question accordingly agreed to.

Clause 5

GROUP ACCOUNTS

Amendment proposed: No. 12 in page 7, line 21, leave out 'and' and insert 'or'.—[Mr. Redwood.]

Question put, That the amendment be made:—

The House divided: Ayes 129, Noes 30.

Division No. 347]
[11.23 pm


AYES


Alexander, Richard
Goodson-Wickes, Dr Charles


Alison, Rt Hon Michael
Griffiths, Peter (Portsmouth N)


Amos, Alan
Gummer, Rt Hon John Selwyn


Arbuthnot, James
Hague, William


Arnold, Jacques (Gravesham)
Hamilton, Hon Archie (Epsom)


Ashby, David
Hamilton, Neil (Tatton)


Ashdown, Rt Hon Paddy
Hanley, Jeremy


Atkinson, David
Harris, David


Baker, Nicholas (Dorset N)
Hayward, Robert


Batiste, Spencer
Hind, Kenneth


Beith, A. J,
Howarth, G. (Cannock &amp; B'wd)


Bellingham, Henry
Howe, Rt Hon Sir Geoffrey


Bennett, Nicholas (Pembroke)
Howells, Geraint


Biffen, Rt Hon John
Hughes, Robert G. (Harrow W)


Boswell, Tim
Hunt, David (Wirral W)


Bowis, John
Hunt, Sir John (Ravensbourne)


Brazier, Julian
Hunter, Andrew


Brown, Michael (Brigg &amp; Cl't's)
Irvine, Michael


Bruce, Malcolm (Gordon)
Jack, Michael


Buck, Sir Antony
Janman, Tim


Burns, Simon
Jessel, Toby


Burt, Alistair
Jones, Gwilym (Cardiff N)


Butterfill, John
Kirkwood, Archy


Campbell, Menzies (Fife NE)
Knapman, Roger


Carlisle, Kenneth (Lincoln)
Knight, Greg (Derby North)


Carrington, Matthew
Knight, Dame Jill (Edgbaston)


Carttiss, Michael
Knowles, Michael


Cash, William
Lang, Ian


Chapman, Sydney
Latham, Michael


Chope, Christopher
Lester, Jim (Broxtowe)


Clark, Dr Michael (Rochford)
Lilley, Peter


Clarke, Rt Hon K. (Rushcliffe)
Livsey, Richard


Coombs, Anthony (Wyre F'rest)
Lyell, Sir Nicholas


Coombs, Simon (Swindon)
Maclean, David


Cran, James
McLoughlin, Patrick


Curry, David
Mans, Keith


Davis, David (Boothferry)
Martin, David (Portsmouth S)


Devlin, Tim
Maxwell-Hyslop, Robin


Dorrell, Stephen
Meyer, Sir Anthony


Douglas-Hamilton, Lord James
Mills, Iain


Dover, Den
Nicholls, Patrick


Dunn, Bob
Nicholson, Emma (Devon West)


Durant, Tony
Redwood, John


Evennett, David
Ridley, Rt Hon Nicholas


Fallon, Michael
Sackville, Hon Tom


Favell, Tony
Shaw, David (Dover)


Fearn, Ronald
Shaw, Sir Giles (Pudsey)


Fishburn, John Dudley
Shephard, Mrs G. (Norfolk SW)


Forman, Nigel
Smith, Tim (Beaconsfield)


Forsyth, Michael (Stirling)
Soames, Hon Nicholas


Forth, Eric
Speller, Tony


Freeman, Roger
Stevens, Lewis


Gale, Roger
Stewart, Andy (Sherwood)


Garel-Jones, Tristan
Stradling Thomas, Sir John


Glyn, Dr Alan
Summerson, Hugo


Goodlad, Alastair
Taylor, John M (Solihull)






Taylor, Teddy (S'end E)
Wardle, Charles (Bexhill)


Thompson, D. (Calder Valley)
Warren, Kenneth


Thompson, Patrick (Norwich N)
Watts, John


Thorne, Neil
Wheeler, John


Thurnham, Peter
Widdecombe, Ann


Townsend, Cyril D. (B'heath)
Wood, Timothy


Tracey, Richard



Twinn, Dr Ian
Tellers for the Ayes:


Waddington, Rt Hon David
Mr. Irvine Patnick and


Wallace, James
Mr. David Heathcoat-Amory.


Ward, John





NOES


Barnes, Harry (Derbyshire NE)
Jones, Ieuan (Ynys Môn)


Buckley, George J.
Lofthouse, Geoffrey


Campbell-Savours, D. N.
Mahon, Mrs Alice


Cousins, Jim
Meale, Alan


Cryer, Bob
Nellist, Dave


Cunliffe, Lawrence
Pike, Peter L.


Davies, Ron (Caerphilly)
Prescott, John


Dixon, Don
Skinner, Dennis


Ewing, Mrs Margaret (Moray)
Spearing, Nigel


Flynn, Paul
Vaz, Keith


Galloway, George
Welsh, Andrew (Angus E)


Godman, Dr Norman A.
Welsh, Michael (Doncaster N)


Golding, Mrs Llin
Wray, Jimmy


Haynes, Frank



Hinchliffe, David
Tellers for the Noes:


Hughes, John (Coventry NE)
Mr. John Cummings and Mr. Ronnie Campbell.


Illsley, Eric

Question accordingly agreed to.

Schedule 2

[SCHEDULE 4A TO THE COMPANIES ACT 1985] FORM AND CONTENT OF GROUP ACCOUNTS

Mr. Redwood: I beg to move amendment No. 13, in page 204, line 2, leave out 'nominal value' and insert `appropriate amount in respect'.

Madam Deputy Speaker: With this we may take Government amendments Nos. 14 and 15.

Mr. Redwood: The amendments fine-tune the provisions in schedule 2, which prescribe rules derived from the seventh directive for the accounting treatment of mergers and acquisitions. Amendments Nos. 13 and 14 are brought forward in response to a point made in Committee by the hon. Member for Norwich, South (Mr. Garrett); they make a technical change to the provisions on merger accounting to ensure that present accounting practice can continue. Amendment No. 15 makes it clear how the rules on accounting for mergers and acquisitions apply when a group of companies is acquired—that is, a parent company and its subsidiary undertakings.

Question put, That the amendment be made:—

The House divided: Ayes 129, Noes 24.

Division No. 348]
[11.36 pm


AYES


Alexander, Richard
Bowis, John


Alison, Rt Hon Michael
Brazier, Julian


Amess, David
Bruce, Malcolm (Gordon)


Amos, Alan
Buck, Sir Antony


Arbuthnot, James
Burns, Simon


Ashby, David
Burl, Alistair


Atkinson, David
Butterfill, John


Baker, Nicholas (Dorset N)
Campbell, Menzies (Fife NE)


Batiste, Spencer
Campbell-Savours, D. N.


Beith, A. J.
Carlisle, Kenneth (Lincoln)


Bellingham, Henry
Carrington, Matthew


Bennett, Nicholas (Pembroke)
Carttiss, Michael


Biffen, Rt Hon John
Cash, William


Boswell, Tim
Chapman, Sydney





Chope, Christopher
Knowles, Michael


Clark, Dr Michael (Rochford)
Lang, Ian


Clarke, Rt Hon K. (Rushcliffe)
Latham, Michael


Coombs, Anthony (Wyre F'rest)
Lester, Jim (Broxtowe)


Coombs, Simon (Swindon)
Lilley, Peter


Cran, James
Livsey, Richard


Curry, David
Lyell, Sir Nicholas


Davis, David (Boothferry)
Maclean, David


Devlin, Tim
McLoughlin, Patrick


Dorrell, Stephen
Mans, Keith


Douglas-Hamilton, Lord James
Martin, David (Portsmouth S)


Dover, Den
Maxwell-Hyslop, Robin


Dunn, Bob
Meyer, Sir Anthony


Durant, Tony
Mills, Iain


Evennett, David
Nicholls, Patrick


Fallon, Michael
Nicholson, Emma (Devon West)


Favell, Tony
Norris, Steve


Fearn, Ronald
Redwood, John


Fishburn, John Dudley
Ridley, Rt Hon Nicholas


Forman, Nigel
Sackville, Hon Tom


Forsyth, Michael (Stirling)
Sainsbury, Hon Tim


Forth, Eric
Shaw, David (Dover)


Freeman, Roger
Shaw, Sir Giles (Pudsey)


Gale, Roger
Shephard, Mrs G. (Norfolk SW)


Garel-Jones, Tristan
Smith, Tim (Beaconsfield)


Glyn, Dr Alan
Soames, Hon Nicholas


Goodlad, Alastair
Speller, Tony


Goodson-Wickes, Dr Charles
Stevens, Lewis


Griffiths, Peter (Portsmouth N)
Stewart, Andy (Sherwood)


Gummer, Rt Hon John Selwyn
Stradling Thomas, Sir John


Hague, William
Summerson, Hugo


Hamilton, Hon Archie (Epsom)
Taylor, Teddy (S'end E)


Hamilton, Neil (Tatton)
Thompson, D. (Calder Valley)


Hanley, Jeremy
Thompson, Patrick (Norwich N)


Harris, David
Thorne, Neil


Hayward, Robert
Thurnham, Peter


Heathcoat-Amory, David
Townsend, Cyril D. (B'heath)


Hind, Kenneth
Tracey, Richard


Howarth, G. (Cannock &amp; B'wd)
Twinn, Dr Ian


Howe, Rt Hon Sir Geoffrey
Waddington, Rt Hon David


Howells, Geraint
Wallace, James


Hughes, Robert G. (Harrow W)
Ward, John


Hunt, David (Wirral W)
Wardle, Charles (Bexhill)


Hunt, Sir John (Ravensbourne)
Warren, Kenneth


Hunter, Andrew
Watts, John


Irvine, Michael
Wheeler, John


Jack, Michael
Widdecombe, Ann


Janman, Tim
Wood. Timothy


Jessel, Toby



Kirkwood, Archy
Tellers for the Ayes:


Knapman, Roger
Mr. Irvine Patnick and Mr. John M. Taylor.


Knight, Greg (Derby North)



Knight, Dame Jill (Edgbaston)





NOES


Buckley, George J.
Lofthouse, Geoffrey


Campbell, Ron (Blyth Valley)
Mahon, Mrs Alice


Cousins, Jim
Nellist, Dave


Cryer, Bob
Pike, Peter L.


Cummings, John
Salmond, Alex


Cunliffe, Lawrence
Skinner, Dennis


Davies, Rt Hon Denzil (Llanelli)
Vaz, Keith


Ewing, Mrs Margaret (Moray)
Welsh, Andrew (Angus E)


Flynn, Paul
Welsh, Michael (Doncaster N)


Godman, Dr Norman A.
Wilson, Brian


Golding, Mrs Llin



Haynes, Frank
Tellers for the Noes:


Hinchliffe, David
Mr. Harry Barnes and Mr. Eric Illsley.


Jones, Ieuan (Ynys Môn)

Question accordingly agreed to.

Amendment proposed: No. 14, in page 204, line 12, leave out from 'means' to end of line 14 and insert—

'—
(a) shares in relation to which section 131 (merger relief) applies, in respect of which the appropriate amount is the nominal value; or
(b) shares in relation to which section 132 (relief in respect of group reconstructions) applies, in respect of which the appropriate amount is the nominal


value together with any minimum premium value within the meaning of that section.'.—[Mr. Redwood.]

Question put,That the amendment be made.

The House divided: Ayes 123, Noes 25.

Division No. 349]
[11.49 pm


AYES


Alison, Rt Hon Michael
Hunt, Sir John (Ravensbourne)


Amess, David
Hunter, Andrew


Amos, Alan
Irvine, Michael


Arbuthnot, James
Jack, Michael


Ashby, David
Janman, Tim


Atkinson, David
Jessel, Toby


Baker, Nicholas (Dorset N)
Kirkwood, Archy


Batiste, Spencer
Knapman, Roger


Bellingham, Henry
Knight, Greg (Derby North)


Bennett, Nicholas (Pembroke)
Knight, Dame Jill (Edgbaston)


Biffen, Rt Hon John
Knowles, Michael


Boswell, Tim
Lang, Ian


Bowis, John
Latham, Michael


Bruce, Malcolm (Gordon)
Lilley, Peter


Buck, Sir Antony
Livsey, Richard


Burns, Simon
Lyell, Sir Nicholas


Burt, Alistair
Maclean, David


Butterfill, John
McLoughlin, Patrick


Campbell, Menzies (Fife NE)
Mans, Keith


Carlisle, Kenneth (Lincoln)
Martin, David (Portsmouth S)


Carrington, Matthew
Maxwell-Hyslop, Robin


Carttiss, Michael
Meyer, Sir Anthony


Cash, William
Mills, Iain


Chope, Christopher
Nicholls, Patrick


Clark, Dr Michael (Rochford)
Nicholson, Emma (Devon West)


Clarke, Rt Hon K. (Rushcliffe)
Norris, Steve


Coombs, Anthony (Wyre F'rest)
Patnick, Irvine


Coombs, Simon (Swindon)
Redwood, John


Cran, James
Ridley, Rt Hon Nicholas


Curry, David
Sackville, Hon Tom


Davis, David (Boothferry)
Sainsbury, Hon Tim


Devlin, Tim
Shaw, David (Dover)


Dorrell, Stephen
Shaw, Sir Giles (Pudsey)


Douglas-Hamilton, Lord James
Shephard, Mrs G. (Norfolk SW)


Dover, Den
Smith, Tim (Beaconsfield)


Dunn, Bob
Soames, Hon Nicholas


Durant, Tony
Speller, Tony


Evennett, David
Stevens, Lewis


Favell, Tony
Stewart, Andy (Sherwood)


Fishburn, John Dudley
Stradling Thomas, Sir John


Forman, Nigel
Summerson, Hugo


Forsyth, Michael (Stirling)
Taylor, John M (Solihull)


Forth, Eric
Taylor, Teddy (S'end E)


Freeman, Roger
Thompson, D. (Calder Valley)


Gale, Roger
Thompson, Patrick (Norwich N)


Garel-Jones, Tristan
Thorne, Neil


Glyn, Dr Alan
Thurnham, Peter


Goodlad, Alastair
Townsend, Cyril D. (B'heath)


Goodson-Wickes, Dr Charles
Tracey, Richard


Griffiths, Peter (Portsmouth N)
Twinn, Dr Ian


Gummer, Rt Hon John Selwyn
Waddington, Rt Hon David


Hague, William
Wallace, James


Hamilton, Hon Archie (Epsom)
Ward, John


Hamilton, Neil (Tatton)
Wardle, Charles (Bexhill)


Hanley, Jeremy
Warren, Kenneth


Harris, David
Watts, John


Hayward, Robert
Wheeler, John


Heathcoat-Amory, David
Widdecombe, Ann


Hind, Kenneth
Wood, Timothy


Howarth, G. (Cannock &amp; B'wd)



Howe, Rt Hon Sir Geoffrey
Tellers for the Ayes:


Howells, Geraint
Mr. Michael Fallon and


Hughes, Robert G. (Harrow W)
Mr. Sydney Chapman.


Hunt, David (Wirral W)





NOES


Buckley, George J.
Cunliffe, Lawrence


Campbell, Ron (Blyth Valley)
Dixon, Don


Campbell-Savours, D. N.
Ewing, Mrs Margaret (Moray)


Cousins, Jim
Flynn, Paul


Cryer, Bob
Golding, Mrs Llin


Cummings, John
Haynes, Frank





Hinchliffe, David
Vaz, Keith


Hughes, John (Coventry NE)
Welsh, Andrew (Angus E)


Lofthouse, Geoffrey
Welsh, Michael (Doncaster N)


Mahon, Mrs Alice
Wray, Jimmy


Meale, Alan



Nellist, Dave
Tellers for the Noes:


Pike, Peter L.
Mr. Harry Barnes and


Skinner, Dennis
Mr. Eric Illsley.


Spearing, Nigel

Question accordingly agreed to.

12 midnight

The Lord President of the Council and Leader of the House of Commons (Sir Geoffrey Howe): On a point of order, Madam Deputy Speaker. I beg to move, That further consideration of the Bill be now adjourned.
With permission I shall couple that with a short statement about changes in the business announced for this week:
THURSDAY 26 OCTOBER—Timetable motion On the Companies Bill [Lords] and Children Bill [Lords].
Followed by completion of remaining stages of the Companies Bill [Lords].
FRIDAY 27 OCTOBER—Ways and means resolution relating to the Football Spectators Bill [Lords].
Followed by completion of remaining stages of the Children Bill [Lords].
That should provide for the House time to consider the Bills that are now before it, which I have identified, comparable in scale to the time visualised in the arrangements made through the usual channels and will ensure that the business is handled expeditiously in the remainder of the week.

Mr. Cryer: On a point of order, Madam Deputy Speaker. The Leader of the House has used the opportunity of moving the adjournment of the debate to make a business statement. Surely it would be the proper procedure to have questions on the business statement, as is the usual case, to disentangle the business statement from the justification for moving the adjournment of the present Bill. The Leader of the House did not actually move the adjournment of the debate. Therefore, I believe that we should be given the opportunity to ask business questions about the guillotine motions.

Madam Deputy Speaker: The hon. Gentleman knows, and I should remind the House, that the motion is debatable.

Mr. Skinner: In common with my hon. Friend the Member for Bradford, South (Mr. Cryer) I want to object as this is the first time that I have heard a Leader of the House move the adjournment of a debate and, at the same time, indicate a change in the business by introducing a guillotine.
I know that the right hon. and learned Gentleman is new to the job, that he has not been around a great deal and that he has a lot of trouble with the Prime Minister. He should explain, however, where in "Erskine May" this practice is allowed. I note that the Clerk is having a word with Madam Deputy Speaker and I suppose that he is trying to square it for the Leader of the House.
This is an indication of the way in which the Government have got their business into a shambles [Interruption.]

Madam Deputy Speaker: Order. I must hear the hon. Member for Bolsover (Mr. Skinner).

Mr. Skinner: Here we have a Government with a 150 majority——

Hon. Members: At the next election.

Madam Deputy Speaker: Order.

Mr. Skinner: If I can just correct the lager louts who have come straight from the Bar—mind you, it is not only lager.
The Government have a majority over the Labour party of approximately 150 hon. Members. I do not count the rag, tag and bobtails. I just subtract the number of Labour Members from the number of Conservatives because tonight, for example, the Liberals—or whatever they call themselves—have not been voting with us; they have been voting with the Government. That means that the Government majority has been even greater than 150. So the Government have a majority of 150 over the Labour party, but in the Lobbies, on the last two or three votes, the Government have been able to muster only 120-odd hon. Members—and that includes my hon. Friend the Member for Workington (Mr. Campbell-Savours) who, on occasions, goes into the Tory Lobby to try to confuse them—at least, that is what he tells me.
We have a Government with a massive majority but at the fag end of a Session they cannot get 150 hon. Members into the Lobby to get their business through. It is not the job of a Labour Opposition to get more than 20 or 30 hon. Members in our Lobby. It is the job of the Labour Opposition to make sure that we occupy Government time, especially when the Government are up against the wall at the end of a parliamentary Session. It is indicative of this state of affairs that the Leader of the House had had to come to the House to introduce two guillotine motions at five past 12 in the morning for two Bills, each of which has several hundred amendments. There is something wrong with a Government who have two Bills—with 400 amendments on one, and about 800 on the other—who do not know whether they are on this earth or Fullers. That shows not only that the Government are in a shambles, but that the Cabinet are beginning to lose their grip on the House——

Mr. James Wallace: Perhaps the hon. Gentleman would care to contemplate the fact that in another place the Government have introduced more than 400 amendments to the Local Government and Housing Bill which at some time will no doubt have to come back to this House.

Mr. Skinner: What can you expect? On the one hand, the Prime Minister is gallivanting around the world. She does not know what is happening in this place. She just flits in, has a photo opportunity outside, and is then off to Japan and Kuala Lumpur. She is falling out with the Commonwealth, and the Front Bench are getting the business cocked up. What does the hon. Gentleman expect? I am not surprised that the Government are in this shambles, but I should like to know what will happen when she comes back. I should like to be a fly on the wall at the Cabinet meeting tomorrow morning when she says, "What the hell's going on? I've been holding things up out there in Kuala Lumpur against 48 other Ministers, but this lot have been allowing 20-odd Labour members to run

rings round the Government and keep the House sitting until the middle of the night, losing Bills left right and centre."

Mr. Campbell-Savours: The Prime Minister has sacked the Leader of the House once.

Mr. Skinner: Yes, she did sack him—and she took his house off him and gave it to the Foreign Secretary, a man with some kids; then the Leader of the House complained because he wanted a mansion, so she kicked the Chancellor of the Exchequer out of his house—he has kids—and put in a man without any kids. The Government really have got themselves into a mess in the past few months.
So I am pleased that Labour is 26 points ahead in the polls. All this disarray started when I became chairman of the Labour party. We were six points behind in the polls when I took over the chairmanship at the back end of 1988 and by the time I have finished we are 26 points in front. Some people are suggesting that I should carry on, but I do not believe in patronage. I believe in the system of elections. I have done my stint and am happy to look at the Government Front Bench—incidentally, the Secretary of State for Trade and Industry is now here. He had the job of selling water privatisation and the poll tax. According to all the communiqués from Bernard Ingham——

Madam Deputy Speaker: Order. The hon. Gentleman makes amusing speeches, but I am sure that he will keep to the terms of the motion before us.

Mr. Skinner: I am trying to say that the Government have lost their way. They had the reshuffle to try to present a different image, so they shifted the right hon. Gentleman to the Department of Trade and Industry. He could not sell water privatisation and the poll tax, and now he has to sell £20 billion worth of goods abroad. That shows the disarray in the Cabinet.
Yesterday, the Chancellor spoke, and about two Cabinet Ministers turned up to hear him. Is it any wonder that Members were saying in the Lobbies tonight that they would not stop here to carry the Companies Bill through? If Ministers, they said, did not turn up for major debates, why should they turn up and vote for them in the Lobbies? That shows that the Government are now at the tether end.
I hope that we shall have the opportunity to vote against the guillotine tomorrow, to show that we are going to fight the Government to the bitter end. I hope, too, that the Government will have the sense to pull off the Associated British Ports (No. 2) Bill—[Interruption.]

Madam Deputy Speaker: Order. The hon. Gentleman knows as well as I do that that is not part of the motion, to which I refer him.

Mr. Skinner: The Leader of the House made a business statement, and if I had asked him a question—as opposed to taking part in this debate—I would have told him that now that he is changing the business for Thursday and Friday I could legitimately ask him to get rid of that so-called private Bill. It is a political Bill which will allow 15 million tonnes of coal to be imported to Britain at a time when we have a £20 billion balance of payments problem.
It is legitimate to say this in this debate because it is partly a business motion. The private Bill should be


withdrawn. It is just conceivable—although I cannot guarantee it—that if the Bill is withdrawn, we might get to the end of the parliamentary Session with less fuss and bother. If 15 million tonnes of coal are to be brought here through these ports, they will add to the massive balance of payments problem.
I suggest that, in these last few weeks of the Session, the Leader of the House consult Back Benchers, as the last Leader of the House did. He met us in July in the Leader's room. We had a nice little discussion about the Associated British Ports (No. 2) Bill. It is important that other hon. Members know that. The Government decided to take the Bill off in July, using various methods of getting rid of it. It is legitimate to suggest that the new Leader of the House get rid of it altogether. Why should there be a carry-over motion for the Bill? It was flawed. Not only did the Chairman——

Madam Deputy Speaker: Order. I have called the hon. Gentleman to order now on more than one occasion. He knows our procedures. I refer him to our Standing Orders—to Standing Order No. 33, to be precise, which lays down that he can debate only what is in the motion before us. The hon. Gentleman is a clever parliamentarian, and I hope that he will now return to the motion.

Mr. Skinner: As I said earlier, that would have applied had the Leader of the House only moved the adjournment of the debate. But he did not. He came here with a hybrid motion which included a business statement and a motion to adjourn proceedings on the Companies Bill. You, Madam Deputy Speaker, and the authorities in the House, heard it all. It was a remarkable proposition——

Madam Deputy Speaker: Order. Certainly the procedure on the two Bills to which the Leader of the House referred are open for debate.

Mr. Skinner: Of course they are. When the Leader of the House makes a business statement, anyone can stand up and, if called by the Speaker, ask why certain other matters should not be dealt with in the statement. It is legitimate for any hon. Member to raise any subject he or she likes. I am saying that, in view of the two guillotines that are being proposed, the Leader of the House should follow the example of his predecessor—the present Secretary of State for Energy—and consider the proposition that we should get rid of that Associated British Ports (No. 2) Bill so that we can proceed.

Madam Deputy Speaker: Order. I have referred the hon. Gentleman to our Standing Orders. I refer him to Standing Order No. 33, which is very germane to this debate. He can of course refer to the business that the Leader of the House has referred to, which are the two Bills, the Companies Bill and the Children Bill.

Mr. Skinner: As a matter of fact, the Children Bill, although it has been referred to, was not a matter for us. I came in here last night and listened to a very good debate on that Bill. About 10 hon. Members on both sides of the House took part. There were several of my hon. Friends who had served on the Standing Committee, and two or three Tories joined in. One or two Tories made comments on points of order today, but they had gone to bed, so they did not know what had happened.
A lot of Opposition Members are quite happy with the Children Bill and how it is being dealt with. We do not believe in guillotines and would much prefer it if it were dealt with properly, but nobody should assume that we can lump the Children Bill and the Companies Bill together. The Companies Bill is all about fraud and how to tighten up on it.
I said earlier that we ought to be discussing the fraud involving Ferranti. Now that we are to have a guillotine on the debate on the Companies Bill, it is conceivable that some of my hon. Friends will not have an opportunity to talk about the massive fraud that has taken place. We shall not be able to talk about that company of which Edward du Cann was a non-executive director.

Mr. Cryer: Tell us what happened.

Mr. Skinner: He ran away. Just before a certain housing company went to the wall, Edward du Cann decided to pack in as a non-executive director saying, "I think there is summat smelly here. I've been taking the money all this time, but now it looks as if it is going down the pan, I am getting out of the way."
If debates on the Companies Bill were not guillotined, it would be a good idea for hon. Members to talk about that issue. Why can non-executive directors leave firms in a hurry like that and leave someone else holding the baby, because that is roughly what happened?
I do not think that we shall be able to discuss the Ferranti issue properly if there is a guillotine. Ferranti got into bed with this company called ISC and a fellow called James Guerin. He was a funny sort of fellow. They could not find him for a while. It is known that, by and large, Ferranti gets its money from the British taxpayer because it has large defence contracts. The auditors' inspection of the books could have been debated in the debate on the Companies Bill if there had not been a guillotine. The auditors obviously did not know what they were doing. The Companies Bill is designed to get auditors to look at these things properly.

Mr. Campbell-Savours: What happened?

Mr. Skinner: With Ferranti, the auditors examined the company and said, "Oh, it's all right. You can join forces with ISC. They are clean." It turned out that ISC was guilty of about a £200 million fraud. Imagine if it had been someone on social security. There are people in Britain who are locked up in gaol because they have been found guilty of a minor social security fraud, yet somehow the fraud squad has not got round to dealing properly with this matter.
If there is a guillotine, it will be difficult to deal with issues concerning fraud in the City and elsewhere. That is why I think that some of my hon. Friends may want to speak in this short debate—they may want to reveal some of the details before the guillotine falls tomorrow.

Mr. Campbell-Savours: What about clause 72?

Mr. Skinner: Indeed. There is just a chance that, under the guillotine, debate on clause 72 will not be reached. The chopper will fall.
The Government have run out of steam and the Cabinet is in total disarray. At the end of the Session the Government have piled up 400 amendments to the Children Bill and 800 amendments to the Companies Bill. They have lost their way. They cannot keep their troops


here at night. They were down to 120 hon. Members at 12 o'clock and that is the sign of a Government in retreat. I am pleased about that, but people outside the House should know. For those reasons I hope that——

Mr. Campbell-Savours: Has my hon. Friend seen clause 67 which deals with investigations into insider dealing? The debate may be curtailed on that matter.

Mr. Skinner: We may not be able to deal with that so perhaps we should mention it now. Is that clause about Alan Walters? The Chancellor of the Exchequer says that he is the man doing the insider dealing at No. 10. The Chancellor has a connecting door to No. 10, but he cannot get in because Alan Walters has locked it. We should be able to discuss such matters, but we will probably not be able to because of the guillotine motion.
We will not be able to deal with Guinness. However, to be fair, the Guinness issue is now before the courts and is what we call in Latin, sub judice. Therefore, I will not discuss it now. However, as I have said, we will not be able to discuss Alan Walters, his position on the EMS and his role in the conflict between the Prime Minister and the Chancellor of the Exchequer.
I do not know who will go first, the Prime Minister or the Chancellor. I know that many of my hon. Friends do not agree with my view, but I have money on the fact that the Prime Minister will not lead the Tory party in the next general election. Some people laughed at me when I said that on the radio 12 months ago. However, as a result of the problems with Alan Walters, the insider-dealing man, more people think it is a decent bet. They are asking me to lay off some of my money so that they can get a slice of it. It is a toss up who will go first.
There are people within the Establishment who would like an extended debate on the Companies Bill. Those people are now saying that it is time for the Prime Minister to go. We have only to read some of the posh newspapers to see that. They are suggesting that the Prime Minister is at the tether end of her term of office. My guess is that the Prime Minister might suffer a diplomatic illness during the next parliamentary Session and that will be the end of it. If that happens, in will come the Leader of the House. He will not be moving guillotine motions then because he will be hoping that somebody else will do that for him. However, there is another bloke in the running, the right hon. Member for Henley (Mr. Heseltine). We cannot rule out the possibility of a ballot in November. Traditionally, the Tory party can have a ballot in November but we do not get a vote.

Madam Deputy Speaker: Order. I remind the hon. Gentleman once again that he must make his comments germane to the motion before us. He is straying far from that now.

Mr. Skinner: I was trying to say that if more Tory Members had turned up tonight, including the right hon. Member for Henley, the Leader of the House would not have been placed in this predicament. Many Cabinet Ministers have left the sinking ship as have many of the junior Ministers who usually turn up. In any other part of the parliamentary year the Division bells are rung, the Whips get on the telephone and all the junior Ministers and Cabinet Ministers turn up. They have not turned up

tonight because they think that it is the beginning of the end. If all those people had turned up, the Leader of the House would not have had to move the guillotine motion because there would have been no need for it.

Mr. Campbell-Savours: I do not understand why.

Mr. Skinner: There would have been 250 or 300 Tory Members in the Lobby and some Opposition Members—not me—may have felt a little cowed by the massive majorities piling up against us. My hon. Friend knows that when we came into the Chamber after the Division we heard that the Government had started with 190 and that it had come down to 183. In the next Division it came down to 160. That makes us feel buoyed and confident because we know that we are on a winning streak.
The Government got into such a sorry state that my hon. Friend the Member for Workington (Mr. Campbell-Savours) bailed them out in a Division by voting with them. The Liberals or whatever they call themselves also voted with them. When we see that, it becomes clear that the Leader of the House has got a telephone call from somebody who said to him, "Hey up, Geoff, we are losing our troops. There is a gang of Labour MPs, one of whom has voted with us, causing trouble. They are acting like an Opposition." The Leader of the House is brought in and has to cobble together a guillotine motion on the Companies Bill and the Children Bill in order to get them through.
The Government started the Session last October and have a massive majority of about three or four to one in the House of Lords—when they can get the Lords to work. Some of them turn up and pick up £100 a day tax free straight away. Even with that massive majority the Government cannot organise their business. The ship is beginning to sink. When I reflect upon events in the House yesterday and especially those of today, I begin to understand the opinion polls. I can understand why Labour has 48 or 49 per cent. and the Conservatives are down to 36 or 37 per cent.
That is easy to understand when we remember that the Government are taking on the ambulance crews. That is wicked and shows that the Government are losing their touch. They should pay those people the kind of money they deserve. In our society top company directors have had 26 per cent. increases in the last 12 months, but the ambulance crews are being offered only 6·5 per cent.

Madam Deputy Speaker: Order. I am sure that the hon. Gentleman is about to bring his remarks to a conclusion.

Mr. Skinner: The reason for the Government losing their touch is an amalgam of all those things. They are losing their MPs in the middle of the night and are unable to hold them. When the Conservatives are down to 120 hon. Members at 12 o'clock it means trouble. Everybody knows that, and that is why the Leader of the House is here. He is not here because of any filibuster. I have not heard any filibuster. We have been voting legitimately on matters pertaining to the Bill.

Mrs. Alice Mahon: On a point of order, Madam Deputy Speaker. I hope that the 999 service is working tonight because it looks as if we might have two casualties in the House.

Mr. Skinner: I do not know whether to continue. I can understand the hon. Member for Calder Valley (Mr.


Thompson) dropping off to sleep. He got sacked in the big shuffle. He probably thought, "Why should I bother?" and went to sleep. He could have stayed away altogether.

Mr. Keith Vaz: I am sorry to interrupt my hon. Friend in mid flow. Does he agree that hon. Members in all parts of the House who served diligently on the Standing Committee on the Children Bill—hon. Members such as the hon. Member for Stockton, South (Mr. Devlin) and I—were concerned when we heard from the Leader of the House that the Bill is to be guillotined? Does he accept that the Bill is a consensus matter and that Members from all parties sought negotiations and amendments to make sure that it went through? Does he also agree that people outside who have been waiting for many years for that legislation will be deeply offended at the decision to guillotine this important measure?

Mr. Skinner: Only today Tory Members were weeping about how we did not make as much progress as they wanted to last night, when my hon. Friends were complaining about the licensing and inspection charges on pre-school playgroups, and we had some healthy debates. It is strange that the Government will now introduce a guillotine to stop my hon. Friends from speaking about these matters.
We can regard this little episode of the Leader of the House being dragged here as healthy for us. The Government have lost their troops. The Cabinet do not know which way to turn. The monetarist philosophy is in ruins. The Government are intervening at every possible stage. The Labour party is much more confident. The rag, tag and bobtail party does not matter any more. I think that we shall look back on this night, when the Government caved in at the tail end of the Session, as indicative of a Government on their last legs. I look forward to the end of them.

Mr. Teddy Taylor: I have some brief questions for my right hon. and learned Friend the Leader of the House. We all welcome the motion because it is clear that hon. Members are far too tired, after a busy day, to consider this important Bill. It would be an outrage if people were not to hear about the important work that we are doing on the Companies Bill.
Does the motion moved by my right hon. and learned Friend mean that we shall stop now, or does it mean that we shall stop talking about the Companies Bill, and go on to talk about the merchant shipping order? It would be an outrage if we followed the second route. The order overturns a proposal that, last year, both the Minister in charge and his Parliamentary Private Secretary said was vital for the future of British shipping. Surely we will not stop debating the Companies Bill as a result of the closure motion, and then have to talk about the order.
Secondly, my right hon. and learned Friend the Leader of the House will be aware that if we are to do our job properly we need to have parliamentary papers. Through the good offices of Mr. Speaker, and nobody else, we got an assurance that papers would be provided in the Vote Office, outlining the judgment of the European court. Hon. Members who have it will see that unfortunately—probably because of the speed with which it was produced—a page is missing. That page could be provided if the debate were delayed. The page shows that the

document did not reach the Treasury solicitors until 18 October, which happens by chance to be the day after was presented to the House of Commons, and it was printed in the Order Paper that these items were available in the Treasury Solicitor's office. That is unusual.
The third reason why we should not hurry with this order is that, as my right hon. and learned Friend, with his long experience of the EEC will be aware, if we vote for this order, which will allow foreign ships to be British ships as from now, it will apply only to Britain. This order does not apply to other countries. When we have all this work to do, and people want to hear about the work that we are doing, it would be an outrage to rush through, at great speed and at a late hour when no one will hear, something that will apply only to us.
The treaty of Rome, of which I am sure my right hon. and learned Friend is well aware, says that all countries should be treated equally. Why the blazes, at half past 12 at night, we have to debate this, I do not know. Sadly, we deal with controversial, horrible, nasty and undemocratic matters about which people do not hear at 1, 2 and 3 o'clock in the morning.
I support the motion, but I hope that my right hon. and learned Friend the Leader of the House will say that we are too tired to do important work and that it is an outrage that the debate should take place at this hour. Surely my right hon. and learned Friend will be the great democrat and protector of liberty that I know he is. I trust that he will say that we can defer for a few days something that will overturn and wreck a measure which only last year was recognised by Ministers and Back Benchers as crucial and vital if we were to support British fishermen. Let us not be dirty to our fishermen at 12.30 am. Let us stand firm by democracy. Let us for once have a real debate on a vital issue in prime time.

Mr. Cryer: I cannot recall an announcement by a Leader of the House that sought, in effect, to move progress and, at the same time, to announce a business statement. Such a move shows the contempt that the Government have for the House. Why were not the rights of hon. Members protected by an announcement being made on the screens throughout the House that a business statement was to be made? It is a convention of the House that when a business statement is made and changes are to be announced Members have right of access to the Chamber so that they can ask questions about the statement. It is a long hallowed tradition that Members should be given the opportunity to raise pressing issues that concern them that they believe should take priority over the changes to business that the Leader of the House has made. No opportunity has been given to those hon. Members who are working in their offices to come to the Chamber to express their points of view. I would judge that the annunciator operators have merely been presented with an announcement that there is to be a debate on the adjournment of progress on the Companies Bill. That means that the traditional position of Back Benchers has been deliberately undermined by the Government not announcing a business statement.

Mr. Nigel Spearing: I invite my hon. Friend to clarify his language. He has referred to a tradition, and a tradition in this place is often regarded by those outside as unnecessary and a delaying tactic. Is it not a good democratic practice that when a business statement


is to be made notice is given, if only for a few minutes, so that those who wish to ask a question about the change in the business arrangements can do so? Perhaps my hon. Friend will be able to tell me—he may have been in the Chamber at the time—whether the Leader of the House, in announcing that there would be a timetable motion on Friday, stated that there would be an extended sitting. That would be within the Government's rights but it is a sign of distress. I understand that a guillotine motion would continue to be debated for three hours at the conclusion of the debate on the Football Spectators Bill on Friday.

Mr. Cryer: There will be guillotine motions on Thursday 26 October, which is tomorrow or later today. The Government will continue the debate on the Children Bill on Friday 27 October. The debate on the Bill will follow a Ways and Means resolution on the Football Spectators Bill. The Government know that there is concern about, but a good deal of consensus on, the Children Bill and they want cynically to ensure that there is something following the Ways and Means resolution that Members will wish to reach. They wish to ensure that the Ways and Means resolution on the Football Spectators Bill is not debated at length.
The Government proclaim in loud tones and in generality that they are concerned about taxpayers' expenditure—that is money that is spent by the Government—but they do not like hon. Members such as myself speaking on Ways and Means resolutions. They regard that as an inconvenience. When they are spending hundreds of thousands of pounds, millions of pounds or, in the case of the privatisation of the water industry, billions of pounds, it is inconvenient to have an extra 45 minutes of debate after the Division at 10 o'clock. That is what the business is about on Friday. The Government are cynically curtailing debate on the Ways and Means resolution by arranging to take the Children Bill after it. They know that there will be pressure on debate. There will be those who say, "For goodness sake do not talk about money and Ways and Means. Let us get on to the Children Bill, where there is consensus." The notion that the Government are concerned about the Children Bill and are providing time for that is absolutely false. It is a cynical manoeuvre to curtail debate in this place about a subject in which this place should have some measure of interest, and that is the expenditure of money. That is one reason why the change in business has been wrapped up in the motion to curtail business on the Companies Bill.
Although there were shouts from Conservative Members when my hon. Friend the Member for Bolsover (Mr. Skinner) raised the question of the Children Bill, the reality is that the Bill was progressing smoothly last night. There had been an extensive debate, but every hon. Member who spoke had a deep and concerned interest. Indeed, I had two amendments on the Amendment Paper concerned with charging for pre-school playgroups. A great many representations have been made to me on that matter. I have received a petition and 100 letters, including half a dozen from organisations running pre-school playgroups in my constituency that expressed great concern about the charges for registration and inspection.
I was surprised to find that, although I had tabled those amendments, and although that usually means that one is

called fairly early in the debate, I was in fact called eighth or ninth because of the long queue to speak. Therefore, it is quite false to suggest that there was anything other than concerned and detailed discussion last night.

Mr. Dave Nellist: While my hon. Friend was explaining the importance of the discussion on the Children Bill, I heard Conservative Members complaining about the number of votes that were taken. My understanding—and, I think, that of my hon. Friend—is that we are paid a fairly heavy salary to come to this place to vote on legislation. Are Tory Members suggesting that we are not sent here to do that? If so, what are we paid to do?

Mr. Cryer: In fact, there were very few votes last night because the vast majority of the amendments being debated related to schedule 8. Under the Standing Orders of the House, it is not possible to vote on amendments until we reach the clause or schedule to which they apply. Hon. Members will be aware that schedule 8 is towards the end of a group of schedules which themselves are near the end of the Bill. Therefore, it was not possible to vote on my amendments.
I must make it clear that my amendments were not tabled last night and they were in no way superfluous. I was not the only hon. Member wanting to ensure that the charges were removed. I presented the House with the choice of either removing the charge for inspection and registration or limiting the charge to a maximum of £10. The Minister said that he would not charge more than £10, so through the vehicle of my amendment the Opposition gained a valuable concession. That was not entirely satisfactory, however, because the actual amendment concerned the right of the Minister to issue orders.
As the House knows, these are very unsatisfactory. Ministers change, and an assurance that a Minister gives does not bind other Ministers. The fact is, however, that an assurance was obtained that will go some way towards giving the pre-school playgroup organisations in my constituency some confidence in the fact of support for the figure of £10 in my amendment—support, indeed, that I received in a letter from a playgroup association representing the whole of Bradford. The time was not wasted; it was typical of the way in which the House of Commons works late at night, when there is a good deal of detailed argument and some common sense and understanding.

Mr. John Butterfill: Does the hon. Gentleman accept, however, that his attempt to justify his behaviour last night, and the intervention of his hon. Friend the Member for Coventry, South-East (Mr. Nellist), would have much more validity were it not for the fact that, in the many Divisions that were called, no one voted on his side? If there was real concern, why did no one support the hon. Gentleman in the Lobby?

Mr. Cryer: It simply is not correct to say that many Divisions were called with no hon. Members in the Lobby. As a matter of fact, I was very sorry that my two amendments—Nos. 360 and 361—were not subjected to a Division. I would have asked for a Division to remove all possibility of charging, but—as I explained to the House—that was not possible, because my amendments affected schedule 8, which could not be voted on until that stage in


the Bill was reached, which would be at the very end of the proceedings. The truth is that not enough time has been allowed for ordinary consideration of the Children Bill.

Mr. Skinner: I think we need to explain why there were only about three or four Divisions, and Opposition votes in all but one—the first. That was deliberate: we decided to find out how many Tory Members were present before we kicked off with the Bill. That is always a good exercise. If they are down to, say, 130 or 140, we know that they will not last very long, and tonight was a good indication. So, last night, we tested them early on. We did not want anyone to vote, so two of us tested the Tories. We found 183 in their Lobby, and we realised then that they might manage with that number for about an hour or two, but not much longer. My prediction turned out to be right. Now they are making a song and dance about no one voting in our Division; but we did not want anyone to vote in our Division. We simply wanted to find out how many Tory Members were here.

Mr. Tim Devlin: That is not the case.

Mr. Skinner: Oh, yes, it is. We found that there were only 183 Tory Members here—and the hon. Member who keeps rabbiting on was not here; he had gone home.

Mr. Devlin: On a point of order, Mr. Deputy Speaker. I wonder whether you could advise the House whether the activities described by the hon. Member for Bolsover (Mr. Skinner) are an abuse of the procedures of the House.

Mr. Deputy Speaker (Sir Paul Dean): Order. These are matters for debate.

Mr. Cryer: I am grateful, Mr. Deputy Speaker, for your comment indicating that last night's events were perfectly proper and entirely within the provisions of Standing Orders of the House. Yet we are being accused by the Government of breaching them, when that is patently not true.
I must say that I feel very critical of—and angry with—Conservative Members who make such imputations about the Chair. As the House knows, any occupant of the Chair would draw the House's attention to any breach of Standing Orders immediately: he would not need to wait for 24 hours for guidance from some Back Bencher seeking a quarrel where none existed. [Interruption.] My hon. Friends tell me that the hon. Gentleman is highly unqualified to make any such comment, because he was not even here: no doubt he was tucked up in his Division Bell flat.

Mr. Brian Wilson: I am grateful as this debate has enabled me to learn about the concession which my hon. Friend the Member for Bradford, South (Mr. Cryer) succeeded in obtaining late last night. I suggest that that one concession which will be appreciated by playgroups throughout the country is considerably more valuable than anything that the hon. Member for Stockton, South (Mr. Devlin) will do in this place if he lives to be 100. To illustrate the synthetic outrage displayed by Conservative Members in their concern about the Children Bill, will my hon. Friend remind the House how many Government amendments to the Children Bill have been tabled this week? Might that not be a measure of their high regard for getting it through?

Mr. Cryer: I understand that the Government tabled some 400 amendments to the Children Bill. That demonstrates either very bad drafting or concessions in the Committee. Frankly, given this Government's record, the notion that they would make a large number of concessions—although they allowed some on the Children Bill—is not borne out by experience. On Bill after Bill the Government have rejected our modest and minor amendments. It is obviously a mixture of drafting a Bill that is not up to the standards required by the House but approved by the Government, and a number of concessions.

Mr. Vaz: It is important to dispel the myth that there was no co-operation between the two sides of the House concerning the Children Bill. We co-operated throughout the Children Bill, even when we had reached this stage in our deliberations. We co-operated to such an extent that we did not press new clause 5, which I proposed. to a Division because we believed that it was important to make progress. At 2.30 this morning when the hon. Member for Stockton, South (Mr. Devlin) was in bed, I and my hon. Friend the Member for Middlesbrough (Mr. Bell) argued that we should continue debating the Children Bill as it was so important to get the measure through.

Mr. Cryer: Yes, indeed. A number of us voted that way, unlike the Government who voted for closure, of course without the assistance of the hon. Member for Stockton. South, who, as my hon. Friend pointed out, was in bed.
My understanding is that there has been a good deal of co-operation on the Children Bill. It is quite false and inaccurate for any Conservative Member to argue that that is not the case. Although the Bill has had a great deal of cross-party support, and although it was discussed in Committee in a spirit of assistance from the Opposition, the Government have tabled a huge number of amendments. That suggests that the Government are dealing with these matters in too much haste.
I accept that the Children Bill covers a number of delicate and difficult matters, and therefore the legislation has to be phrased very carefully, as clearly as we can, to make sure that children's rights are properly protected. But that process will not be enhanced by a guillotine—it will be denied. If we are charitable towards the Government—and that is not easy—they must realise that in what they recognise by the number of amendments that they have tabled, to be a delicate and difficult legislative area the process will not be assisted by haste. The Government have to face up to the brutal fact that the measure needs more time because the Government have frittered away the past 12 months on monster Bills such as the Water Bill which was in two volumes. They abused the House by putting through vast quantities of legislation. During proceedings on the Electricity Bill to privatise electricity, the procedure was changed, as a last gasp from the then Secretary of State for Energy who announced that a separate corporation was to be set up to finance the closure of the Magnox reactors. All that was against the background that decisions were not being taken by the Cabinet and changes were being made, yet the House is supposed to deal with this huge volume of legislation.
I was present on Second Reading of the Children Bill. The Government embarked on a cynical manoeuvre. The Minister said that he hoped that there would be consensus


and understanding. Much common concern was expressed by hon. Members, and he said that he hoped that the Bill would not become a political issue. By their brutal treatment of the House, the Government made it a political issue. The Bill does not deserve such brutal treatment.
The Government must accept that they will not pass legislation in the time that they have allocated. If they want to deal properly with the Children Bill they will simply have to allocate more time. Of course they do not want to do so, because their obsession with their political ideology and their fear of the Prime Minister prevents them from offering time to allow proper discussion of a decent Bill such as the Children Bill.

Mr. Peter L. Pike: I am sure that my hon. Friend is aware that the group of amendments that we were about to debate last night on the Children Bill dealt with grandparents' rights. My hon. Friend will realise that the issue was not raised only this year, because hon. Members have been tabling early-day motions about it for years. Many people inside and outside the House will be concerned to hear that a guillotine motion is to be introduced tomorrow, thereby not allowing enough time for that important principle, and many others, to be debated properly.

Mr. Cryer: My hon. Friend is right. One of the reasons why I voted against adjourning debate on the Children Bill was that I knew that for several years my hon. Friend the Member for Ogmore (Mr. Powell), aided by other people, had tabled early-day motions and campaigned for grandparents' rights. He was willing to move amendments to the Bill, but he was denied that opportunity, which is outrageous.

Mr. Spearing: The earlier part of the debate to adjourn debate on the Bill was understandably, and quite properly, partisan. I suggest to hon. Members that we should not be partisan on the Children Bill. The public often worry that we are over-partisan. Is it not a fact that time and consideration of the Children Bill are of the essence to get it right? The number of amendments that have been tabled to that non-controversial Bill suggest just that. If the Government are suggesting that they, or any political party, should get themselves out of an embarrassment that they have got themselves into through unwise legislation or an overloaded timetable, or both, by sacrificing proper consideration on a non-party political basis of such a sensitive and important issue, that is surely unworthy of any Government. I therefore appeal to the Leader of the House to reconsider the principle of a guillotine on the Bill—least of all this week—and to consider another way of proceeding, such as reintroducing the Bill in the next Session of Parliament.

Mr. Cryer: My hon. Friend is right. A further abuse of Parliament is that the Government propose to give additional powers to Ministers on many Bills. They are saying, "We have not time to deal with detailed aspects of Bills. Therefore, we shall give widespread delegated powers to Ministers to deal with the details." If the House had adequate powers for dealing with delegated legislation there might be an argument for doing that. As my hon.
Friends know, I chair the Joint Select Committee on Statutory Instruments. Frankly, the means of dealing with delegated powers are totally inadequate.
Very shortly, in November, we shall have a meeting of the Commonwealth conference on delegated powers here in London. My guess is that most of the other Commonwealth countries will be able to show us a good deal of better practice in dealing with delegated legislation. One Conservative Member said that it is going to be an exciting conference. He was joking. It will be dull and detailed work. However, it is absolutely necessary if Parliament is to exercise some scrutiny of Ministers' powers, which must be examined to see whether they are using them arbitrarily or whether they are the powers that Parliament has granted.
1 am
That sort of work carried out by a Committee which does not have the right of debate on the Floor of the House, is best carried out in Committee upstairs and, of course, examined by all hon. Members on Report. It is far better that the House should examine Bills in detail on Report than simply shuffle off powers to Ministers and let them get on with it. That is an abrogation of our duty. By introducing this timetable motion, the Government are demonstrating an abrogation of parliamentary rights to carry out those duties. As an hon. Member implied by his lofty joke, the Statutory Instruments Committee's work is detailed. It is actually much more interesting to deal with Bills on the Floor of the House, yet we are being denied that opportunity because of the Government's obduracy.

Mr. Nellist: To ensure that the issue is properly considered, will my hon. Friend care to play devil's advocate in his own argument and consider the opposite side of the coin? Let us consider a Labour Government bringing forth enabling legislation in the form of an industry measure, which would give a Labour Secretary of State for Industry the power to nationalise companies and then, one by one, through either a statutory instrument or regulation, hand over to the Department as and when was necessary to speed up and complete the process as quickly as possible the necessary powers to take over industry after industry. I have heard that argument put forward over the past 10 or 15 years as an elegant and efficient solution to the time-wasting delays that a Labour Government could face from a future Tory Opposition. Will my hon. Friend explore that possibility?

Mr. Deputy Speaker: I am sure that, in responding to that question, the hon. Member for Bradford, South (Mr. Cryer) will stick to the terms of the motion that we are discussing.

Mr. Cryer: Indeed, Mr. Deputy Speaker.
It is an interesting train of thought. I am arguing against the proposal to adjourn the debate on the Companies Bill and also on the guillotine proposals that the Leader of the House has produced. The Government will go ahead and try to get their troops into the Lobby to support the adjournment of the debate today or tomorrow, whichever is the correct parliamentary term, to pass the guillotine motions. If a Labour Government were giving delegated powers to take into public ownership companies which were necessarily to be collectively owned and responsible to generate the devastating manufacturing economy that we shall inherit at the next general election,


the Conservative Opposition would say, "It's the slippery slope of Fascism. It's Communism gone mad. It's a Marxist dictatorship that is about to take over. Where are our rights as Members of Parliament?" That is what they would be saying and that is what they said when there was a Labour Government between 1974 and 1979.
I was a member of that Labour Government and I recall the activities of the present Secretary of State for Trade and Industry who was then just the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). After the first 12 months of disbelief that their inherited right to govern had been somehow upset, when the Conservatives finally got some confidence back, they used every dodge to delay and obstruct that Labour Government. Because they were involved in financial arrangements, the Conservatives also used lobbying organisations outside this place in a very unscrupulous way. Labour Members would not do that.

Mr. Skinner: At the beginning of his response to my hon. Friend the Member for Coventry, South-East (Mr. Nellist), my hon. Friend the Member for Bradford, South (Mr. Cryer) referred to the Tories getting their troops through the Lobbies to get this motion to adjourn the debate carried tonight. It just crossed my mind that if the Tories were down to about 119 votes in the last Division, and as a lot of Tories want to get home to bed, if my hon. Friend the Member for Bradford, South and one or two of my colleagues continued to talk for a considerable time about this very important issue, the Government might not have the 100 votes to close the debate. If they did not have 100 votes to close it, they really would be in Dicky's meadow, wouldn't they?

Mr. Cryer: As my hon. Friend said, the Conservative Whip is now receiving messages, no doubt from telephonic communications, calling on the loyalty of Conservatives who are asleep in bed to come here to vote.
The Government have moved this motion, but we would prefer to be debating the Companies Bill. We do not want to examine the motion in detail. However, now that the Government have tabled it, they should not be too saddened by our desire to examine it in some detail especially given the Government's unprecedented link between the guillotine motions on the Companies Bill and the Children Bill.
The Leader of the House did not introduce the two guillotine motions in a spirit of progress or to move on the business; he introduced them in a spirit of revenge. The Government have the troops and they have tabled the motions because we have debated issues and taken up more time than the Government had planned for. The Government do not want to have to keep their troops in the House too long. They have an unmanageable spill-over period, but they want to chop off the debate and send their troops back to their constituencies and whatever activities the Tory Members get up to. They want to give them a few days' holiday before the new Session of Parliament. That idea is not working because there is too much legislation. Our extra scrutiny is causing the Government problems and we have seen chaos over the past two days.
As I have emphasised, the Opposition are simply examining the Bills in detail. I took part in yesterday's examination of the Children Bill. What about tonight's debate and the companies legislation?

Mr. Vaz: Can I press my hon. Friend on the suggestion made by my hon. Friend the Member for Newham, South (Mr. Spearing)? My hon. Friend the Member for Newham, South was not aware of the detailed negotiations between the Opposition and the Minister for Health. I want to pay tribute to the Minister for Health for the way in which he conducted the Children Bill and for allowing us to discuss important matters with his officials.
Does my hon. Friend the Member for Bradford, South (Mr. Cryer) agree that in view of the seriousness of the Children Bill, it would be a good idea—if the Leader of the House cannot guarantee what we asked for originally, namely, an extra day's debate—that the Bill should be withdrawn and reintroduced in the new Session instead of rushing through important issues such as the grandparents' rights clauses and the Government's wish, in clause 84, to abolish the ancient jurisdiction of wardship that has been with us for more than 450 years?

Mr. Cryer: That is a useful idea. We could also drop some other item of legislation that is equally complex and lengthy, such as the Companies Bill, and reintroduce it later. A number of useful formulae could facilitate the House in its examination of the Children Bill. The Self-Governing Schools etc. (Scotland) Bill, the Employment Bill and the Local Government and Housing Bill could be dropped to make way for it.
The Goverment may say that they promised the Prime Minister—she is on her way back from Kuala Lumpur—that all the business would be got through. Some Bills are relatively obscure and I suspect that if the Self-Governing Schools etc. (Scotland) Bill was dropped and reintroduced during the next Session it might entirely escape the Prime Minister's notice.
The Leader of the House has the opportunity of entering into negotiations to allow the Children Bill to be exempt from the guillotine procedure. Although the Leader of the House is deep in conversation about tactics for tonight, I appeal to him on behalf of my hon. Friends.
I remember the hon. and learned Member for Putney (Mr. Mellor) in his guise as a Minister at the Foreign and Commonwealth Office. He used to combine arrogance and vindictiveness to an unusual degree. When he made his Second Reading speech on the Children Bill he was a changed man. He was genuinely conciliatory and willing to help. Therefore, he got a response from us. There is a large degree of good will among those hon. Members who have taken the trouble to examine the Bill. No doubt that good will is shared by those hon. Members who have not taker' the trouble to read the Bill, but who agree, in principle, that it is a good thing to pass a Bill to provide more. protection for children. There is a big question over the resources necessary to finance some of its provisions, but there is an underlying consensus on the Bill, so it would not be a bad idea if the Leader of the House interjected al this stage to say that he would consider negotiations to exempt that Bill from the guillotine motion. It would be to the Government's credit if they did that. It would mean that the Government recognise that a parliamentary democracy has some merit and is not simply a mechanism by which they can push through their ideologically committted pieces of legislation and damn the rest. The rest includes the Children Bill.
I note that the right hon. and learned Gentleman is not rising to seize that opportunity offered to him to create good will and a sense of value in the democratic processes.


If there were an agreement to remove the guillotine on the Children Bill it would mean that part of the democratic process was being used. The trouble is that the Government do not recognise democracy very much. The only ideas that they recognise are their own and they do not even recognise that this place has any part to play.
The Children Bill was the subject of the right hon. and learned Gentleman's statement, but it is also important to consider the Companies Bill, which is a highly complicated measure. It is designed to scrutinise the operation of companies, the subject of continuous scrutiny by the House during the past 25 years. In recent years a number of items relating to company legislation have been discussed, so it will not do any harm if the Bill is reintroduced in the next Session. The fact that it was introduced in the other place suggests that the Government regard it as non-controversial. My hon. Friends and I would not regard it entirely in that way, but that is the Government's view. Frankly, because the Bill is so complicated——

Mr. Campbell-Savours: On a point of order, Mr. Deputy Speaker. I have just seen the hon. Member for Stockton, South (Mr. Devlin) approach the Government Chief Whip, ask for the right to speak and be told that he cannot. That is an intrusion into the rights of hon. Members. If the hon. Gentleman wishes to speak, he should be allowed to do so. It is not for Whips to instruct hon. Members that they cannot speak in a debate such as this.

Mr. Deputy Speaker: The hon. Gentleman should not speculate in the middle of another hon. Member's speech.

Mr. Cryer: I imagine that the House would probably be a good deal better off if the hon. Member for Stockton, South (Mr. Devlin) did not speak, but I certainly defend his right to speak in the House. My hon. Friend the Member for Workington (Mr. Campbell-Savours) has done the House a service in raising this matter because if the hon. Gentleman were to speak we could all get a cup of tea while he was holding forth and come back in time for the Division. However, it is a sorry business if the Government Chief Whip is so instructing members of his own party, and it is even more disturbing that Conservative Members do not even have the guts to say "no" to the Chief Whip. They do not have sufficient independence and commitment to democracy to rise and speak. It is true that they will not get the opportunity to do so for a little while because I have a few remarks to make about the Companies Bill. After all, the Government have given us this opportunity and I am loth to allow it to pass.
The Companies Bill is lengthy and complicated. Having had a lot of advice from their legion of civil servants—the Department of Trade and Industry has carried out inquiries into company after company and has produced many valuable reports—it is rather strange that the Government have tabled a thousand amendments to the Bill. We must consider the reasons for that. Was the Bill so badly drafted? Have there been so many changes in the positions of companies that the Government have needed to produce a thousand amendments? Surely, it is reasonable for companies to expect to have some degree of certainty about the procedures and passage of legislation. I should have thought that the degree of uncertainty in the

Government's mind, which in turn is producing uncertainty in companies, would merit the Government giving some serious consideration to deferring the Companies Bill to the next Session. That seems the proper way to proceed. I should have thought that in these circumstances, the Companies Bill deserved lengthy consideration.
There was an unfortunate interruption in my membership of the House due to a realignment of the boundaries, but I recall the introduction of a private Bill in 1982, entitled the Lloyds Bill. Some of us opposed it because we said that self-regulation was not the answer. However, self-regulation is the path that the Government have gone down.
Opposition Members want to try to ensure that the Companies Bill is better than the Government have proposed, and that is why we have tabled a modest number of amendments. Certainly, in comparison to the number of amendments that the Government have tabled, the Opposition have been positively parsimonious with their amendments. It is not as though the Opposition had decided to flood the Amendment Paper with amendments because if we had wanted to hold up the Bill as a simple matter of course we could have done so. That is a technique open to the Opposition, but no, we have not taken that course. We decided what we would do as a constructive Opposition, scrutinising matters carefully and disagreeing with the Government's ideology, although, as always, we were in a difficult position because this is a grey area. Should we go for all out opposition, or should we try to improve parts of the Bill and help its passage? These are matters of judgment for the Opposition. We adopted the moderate view that we should try to improve the legislation, to afford genuine protection to the people affected by the Companies Bill—the shareholders, directors and employees.
We wanted, for instance, to improve the Bill by giving shareholders the right to ballot—not an unreasonable view, given the Government's obsession with balloting for the trade unions. We thought that we would take a leaf out of their book and give shareholders the right to decide matters such as political contributions. We tabled a new clause to that effect. We did not table 200 of them, as we could have. We tabled some carefully phrased, moulded and targeted amendments in the best traditions of a constructive Opposition who are biding their time until the general election, after which we shall produce carefully phrased, well drafted and targeted legislation when we form the next Labour Government.
The Government have many resources at their disposal—thousands of civil servants, and advisers on whom they spend about £4 million a year at the taxpayers' expense. I noticed that The Guardian said today that these advisers are paid for largely by the Conservative party. That is not true: I tabled many questions on this and the Government would not disclose the cost——

Mr. Skinner: The company known as the Tory party has more or less gone bust. I have just seen a junior Whip tell the Chief Whip, roughly speaking, "They ain't got a hundred." The Chief Whip pulled a face and sent him out again. That is one reason why the Chief Whip is not moving the closure on this part of the proceedings. The Government have not dared move the closure on my hon. Friend, so they are in more serious trouble than we first thought.

Mr. Cryer: My hon. Friend raises a serious issue. The Government have trampled on parliamentary rights by proposing to adjourn this debate and by producing two guillotine motions later today, but I hesitate to contemplate the idea of their moving the closure on a debate to adjourn consideration of the Companies Bill. That would be outrageous. It is the sort of thing that happened in pre-war Germany. I cannot believe that even this Government would stoop to the gutter of anti-democratic practice and do that. [Interruption.] The hon. Member for Orkney and Shetland (Mr. Wallace) says that I am gullible. He should have said that I have a touching faith in democracy, but it has been severely wounded tonight by the Government's actions.
My endeavours in this place have included discussions of Ways and Means resolutions. At the beginning of my speech, five or 10 minutes ago, I touched on them. On Friday there is to be a Ways and Means resolution on the Football Spectators Bill. I have raised——

Mr. Deputy Speaker: Order. I cannot see what a motion on the Football Spectators Bill has to do with this motion.

Mr. Cryer: Perhaps I can remind you, very humbly, Mr. Deputy Speaker, that when the Leader of the House moved this motion, he said that the Children Bill, which is to guillotined, will be taken after the Ways and Means resolution on Friday 27 October.
One of the genuine strengths of this place is that there are a lot of loopholes, and it is possible to use this place to raise issues which I suspect is not possible in younger, more mannered, legislatures. Ways and Means resolutions have provided me and other hon. Members with interesting ways in which to raise issues.

Mr. Vaz: I do not know whether my hon. Friend is aware that I served on the Standing Committees which considered the Children Bill and the Football Spectators Bill. The problem for those of us who have been involved with the two Bills is that there will not be enough time on Friday to consider the issues that they both raise. We understand that the Football Spectators Bill is to be amended quite substantially by the Minister for Sport and the Home Office, as a new criminal offence is to be created in clause 2. The Leader of the House's statement makes it very difficult for all of Friday's business to be considered properly, hearing in mind the fact that there is to be a guillotine motion on the Football Spectators Bill on Monday.

Mr. Cryer: rose——

The Parliamentary Secretary to the Treasury (Mr. David Waddington): rose——

Mr. Nellist: I spy strangers.

Mr. Skinner: I spy strangers.

Mr. Waddington: rose in his place and claimed to move, That the Question be now put.

The House proceeded to a Division—

Notice being taken that Strangers were present, MR. DEPUTY SPEAKER, pursuant to Standing Order No. 143 (Withdrawal of Strangers from the House), put forthwith the Question, That strangers do withdraw:—

The House divided: Ayes 6, Noes 132.

Division No. 350]
[1.28 am


AYES


Barnes, Harry (Derbyshire NE)
Wilson, Brian


Campbell-Savours, D. N.



Flynn, Paul
Tellers for the Ayes:


Lofthouse, Geoffrey
Mr. Bob Cryer and


Salmond, Alex
 Mr. Dennis Skinner.




NOES


Aitken, Jonathan
Hunt, Sir John (Ravensbourne)


Alison, Rt Hon Michael
Hunter, Andrew


Amess, David
Illsley, Eric


Amos, Alan
Irvine, Michael


Arbuthnot, James
Jack, Michael


Ashby, David
Janman, Tim


Atkinson, David
Jessel, Toby


Baker, Nicholas (Dorset N)
Jones, Martyn (Clwyd S W)


Batiste, Spencer
Kennedy, Charles


Bellingham, Henry
Kirkwood, Archy


Bennett, Nicholas (Pembroke)
Knapman, Roger


Biffen, Rt Hon John
Knight, Greg (Derby North)


Boswell, Tim
Knight, Dame Jill (Edgbaston)


Bowis, John
Lang, Ian


Brazier, Julian
Latham, Michael


Buck, Sir Antony
Lilley, Peter


Burns, Simon
Lofthouse, Geoffrey


Burt, Alistair
Lord, Michael


Butterfill, John
Lyell, Sir Nicholas


Campbell, Menzies (Fife NE)
Maclean, David


Carlisle, Kenneth (Lincoln)
McLoughlin, Patrick


Carrington, Matthew
Mans, Keith


Carttiss, Michael
Martin, David (Portsmouth S)


Cash, William
Maxwell-Hyslop, Robin


Chapman, Sydney
Meale, Alan


Chope, Christopher
Meyer, Sir Anthony


Coombs, Anthony (Wyre F'rest)
Mills, Iain


Coombs, Simon (Swindon)
Nellist, Dave


Cousins, Jim
Nicholls, Patrick


Cran, James
Nicholson, Emma (Devon West)


Cummings, John
Norris, Steve


Cunliffe, Lawrence
Pike, Peter L.


Curry, David
Redwood, John


Davis, David (Boothferry)
Ridley, Rt Hon Nicholas


Devlin, Tim
Sackville, Hon Tom


Dorrell, Stephen
Sainsbury, Hon Tim


Douglas-Hamilton, Lord James
Shaw, David (Dover)


Dover, Den
Shephard, Mrs G. (Norfolk SW)


Durant, Tony
Soames, Hon Nicholas


Evennett, David
Spearing, Nigel


Ewing, Mrs Margaret (Moray)
Speller, Tony


Favell, Tony
Stevens, Lewis


Fields, Terry (L'pool B G'n)
Stewart, Andy (Sherwood)


Fishburn, John Dudley
Stradling Thomas, Sir John


Forman, Nigel
Summerson, Hugo


Forsyth, Michael (Stirling)
Taylor, John M (Solihull)


Forth, Eric
Thompson, D. (Calder Valley)


Freeman, Roger
Thompson, Patrick (Norwich N)


Gale, Roger
Thorne, Neil


Garel-Jones, Tristan
Thurnham, Peter


Glyn, Dr Alan
Townsend, Cyril D. (B'heath)


Golding, Mrs Llin
Tracey, Richard


Goodlad, Alastair
Twinn, Dr Ian


Goodson-Wickes, Dr Charles
Waddington, Rt Hon David


Griffiths, Peter (Portsmouth N)
Wallace, James


Gummer, Rt Hon John Selwyn
Ward, John


Hague, William
Wardle, Charles (Bexhill)


Hamilton, Neil (Tatton)
Warren, Kenneth


Hanley, Jeremy
Watts, John


Harris, David
Welsh, Andrew (Angus E)


Hayward, Robert
Welsh, Michael (Doncaster N)


Heathcoat-Amory, David
Wheeler, John


Hind, Kenneth
Widdecombe, Ann


Howarth, G. (Cannock &amp; B'wd)
Wood, Timothy


Howe, Rt Hon Sir Geoffrey



Hughes, John (Coventry NE)
Tellers for the Noes:


Hughes, Robert G. (Harrow W)
Mr. Irvine Patnick and


Hunt, David (Wirral W)
Mr. Michael Fallon.

Question accordingly negatived.

Mr. Deputy Speaker: There appears to be some genuine misunderstanding about the previous Questions that I put, and there was a certain amount of noise, and spying of strangers. In order to be wholly fair to the House, and to avoid misunderstandings or difficulties, I am prepared to take the closure motion again if it is so moved.

Mr. Waddington: I beg to move, That the Question be now put.

Question put, That the Question be now put:—

The House divided: Ayes 112, Noes 40.

Division No. 351]
[1.40 am


AYES


Aitken, Jonathan
Howarth, G. (Cannock &amp; B'wd)


Alison, Rt Hon Michael
Howe, Rt Hon Sir Geoffrey


Amess, David
Hughes, Robert G. (Harrow W)


Amos, Alan
Hunt, David (Wirral W)


Arbuthnot, James
Hunt, Sir John (Ravensbourne)


Ashby, David
Hunter, Andrew


Atkinson, David
Irvine, Michael


Baker, Nicholas (Dorset N)
Jack, Michael


Batiste, Spencer
Janman, Tim


Bellingham, Henry
Jessel, Toby


Bennett, Nicholas (Pembroke)
Knapman, Roger


Biffen, Rt Hon John
Knight, Greg (Derby North)


Boswell, Tim
Knight, Dame Jill (Edgbaston)


Bowis, John
Lang, Ian


Brazier, Julian
Latham, Michael


Buck, Sir Antony
Lilley, Peter


Burns, Simon
Lord, Michael


Burt, Alistair
Lyell, Sir Nicholas


Butterfill, John
Maclean, David


Carlisle, Kenneth (Lincoln)
McLoughlin, Patrick


Carrington, Matthew
Mans, Keith


Carttiss, Michael
Martin, David (Portsmouth S)


Cash, William
Maxwell-Hyslop, Robin


Chapman, Sydney
Meyer, Sir Anthony


Chope, Christopher
Mills, Iain


Coombs, Anthony (Wyre F'rest)
Nicholls, Patrick


Coombs, Simon (Swindon)
Norris, Steve


Cran, James
Redwood, John


Curry, David
Ridley, Rt Hon Nicholas


Davis, David (Boothferry)
Sackville, Hon Tom


Devlin, Tim
Sainsbury, Hon Tim


Dorrell, Stephen
Shaw, David (Dover)


Douglas-Hamilton, Lord James
Shephard, Mrs G. (Norfolk SW)


Dover, Den
Soames, Hon Nicholas


Durant, Tony
Speller, Tony


Evennett, David
Stevens, Lewis


Fallon, Michael
Stewart, Andy (Sherwood)


Favell, Tony
Stradling Thomas, Sir John


Fishburn, John Dudley
Summerson, Hugo


Forman, Nigel
Thompson, D. (Calder Valley)


Forsyth, Michael (Stirling)
Thompson, Patrick (Norwich N)


Forth, Eric
Thorne, Neil


Freeman, Roger
Thurnham, Peter


Gale, Roger
Townsend, Cyril D. (B'heath)


Garel-Jones, Tristan
Tracey, Richard


Glyn, Dr Alan
Twinn, Dr Ian


Goodlad, Alastair
Waddington, Rt Hon David


Goodson-Wickes, Dr Charles
Ward, John


Griffiths, Peter (Portsmouth N)
Wardle, Charles (Bexhill)


Gummer, Rt Hon John Selwyn
Warren, Kenneth


Hague, William
Watts, John


Hamilton, Hon Archie (Epsom)
Wheeler, John


Hamilton, Neil (Tatton)
Widdecombe, Ann


Hanley, Jeremy
Wood, Timothy


Harris, David



Hayward, Robert
Tellers for the Ayes:


Heathcoat-Amory, David
Mr. John Taylor and


Hind, Kenneth
Mr. Irvine Patnick.




NOES


Barnes, Harry (Derbyshire NE)
Campbell, Menzies (Fife NE)


Buckley, George J.
Campbell, Ron (Blyth Valley)





Campbell-Savours, D. N.
Lofthouse, Geoffrey


Cousins, Jim
Macdonald, Calum A.


Cryer, Bob
Marion, Mrs Alice


Cummings, John
Meale, Alan


Cunliffe, Lawrence
Nellist, Dave


Davies, Rt Hon Denzil (Llanelli)
Pike, Peter L.


Dixon, Don
Prescott, John


Dobson, Frank
Quin, Ms Joyce


Ewing, Mrs Margaret (Moray)
Salmond, Alex


Fields, Terry (L'pool B G'n)
Skinner, Dennis


Flynn, Paul
Spearing, Nigel


Foster, Derek
Vaz, Keith


Garrett, John (Norwich South)
Wallace, James


Godman, Dr Norman A.
Welsh, Andrew (Angus E)


Hughes, John (Coventry NE)
Welsh, Michael (Doncaster N)


Hughes, Robert (Aberdeen N)
Wilson, Brian


Illsley, Eric



Jones, Martyn (Clwyd S W)
Tellers for the Noes:


Kennedy, Charles
Mr. Frank Haynes and Mrs. Llin Golding.


Kirkwood, Archy

Question accordingly agreed to.

Question put accordingly, That further consideration of the Bill be now adjourned:—

The House divided: Ayes 113, Noes 38.

Division No. 352]
[1.51 am


AYES


Aitken, Jonathan
Hamilton, Hon Archie (Epsom)


Alison, Rt Hon Michael
Hamilton, Neil (Tatton)


Amess, David
Hanley, Jeremy


Amos, Alan
Hayward, Robert


Arbuthnot, James
Hind, Kenneth


Ashby, David
Howarth, G. (Cannock &amp; B'wd)


Atkinson, David
Howe, Rt Hon Sir Geoffrey


Baker, Nicholas (Dorset N)
Hughes, Robert G. (Harrow W)


Batiste, Spencer
Hunt, David (Wirral W)


Bellingham, Henry
Hunt, Sir John (Ravensbourne)


Bennett, Nicholas (Pembroke)
Hunter, Andrew


Biffen, Rt Hon John
Irvine, Michael


Boswell, Tim
Jack, Michael


Bowis, John
Janman, Tim


Brazier, Julian
Jessel, Toby


Buck, Sir Antony
Knapman, Roger


Burns, Simon
Knight, Greg (Derby North)


Burt, Alistair
Knight, Dame Jill (Edgbaston)


Butterfill, John
Lang, Ian


Carlisle, Kenneth (Lincoln)
Latham, Michael


Carrington, Matthew
Lilley, Peter


Carttiss, Michael
Lord, Michael


Cash, William
Lyell, Sir Nicholas


Chapman, Sydney
Maclean, David


Chope, Christopher
McLoughlin, Patrick


Coombs, Anthony (Wyre F'rest)
Mans, Keith


Coombs, Simon (Swindon)
Martin, David (Portsmouth S)


Cran, James
Maxwell-Hyslop, Robin


Curry, David
Meyer, Sir Anthony


Davis, David (Boothferry)
Mills, Iain


Devlin, Tim
Nicholls, Patrick


Dorrell, Stephen
Nicholson, Emma (Devon West)


Douglas-Hamilton, Lord James
Norris, Steve


Dover, Den
Patnick, Irvine


Durant, Tony
Redwood, John


Evennett, David
Ridley, Rt Hon Nicholas


Fallon, Michael
Sainsbury, Hon Tim


Favell, Tony
Shaw, David (Dover)


Fishburn, John Dudley
Shephard, Mrs G. (Norfolk SW)


Forman, Nigel
Soames, Hon Nicholas


Forsyth, Michael (Stirling)
Speller, Tony


Forth, Eric
Stevens, Lewis


Freeman, Roger
Stewart, Andy (Sherwood)


Gale, Roger
Stradling Thomas, Sir John


Garel-Jones, Tristan
Summerson, Hugo


Glyn, Dr Alan
Taylor, John M (Solihull)


Goodlad, Alastair
Taylor, Teddy (S'end E)


Goodson-Wickes, Dr Charles
Thompson, D. (Calder Valley)


Griffiths, Peter (Portsmouth N)
Thompson, Patrick (Norwich N)


Gummer, Rt Hon John Selwyn
Thorne, Neil


Hague, William
Thurnham, Peter






Townsend, Cyril D. (B'heath)
Wheeler, John


Tracey, Richard
Widdecombe, Ann


Twinn, Dr Ian
Wood, Timothy


Waddington, Rt Hon David



Ward, John
Tellers for the Ayes:


Wardle, Charles (Bexhill)
Mr. David Heathcoat-Amory and


Warren, Kenneth
Mr. Tom Sackville.


Watts, John





NOES


Barnes, Harry (Derbyshire NE)
Kirkwood, Archy


Buckley, George J.
Lofthouse, Geoffrey


Campbell, Menzies (Fife NE)
Macdonald, Calum A.


Campbell, Ron (Blyth Valley)
Mahon, Mrs Alice


Campbell-Savours, D. N.
Meale, Alan


Cousins, Jim
Nellist, Dave


Cryer, Bob
Pike, Peter L.


Cummings, John
Quin, Ms Joyce


Cunliffe, Lawrence
Salmond, Alex


Dixon, Don
Skinner, Dennis


Dobson, Frank
Spearing, Nigel


Ewing, Mrs Margaret (Moray)
Vaz, Keith


Fields, Terry (L'pool B G'n)
Wallace, James


Flynn, Paul
Watson, Mike (Glasgow, C)


Foster, Derek
Welsh, Andrew (Angus E)


Garrett, John (Norwich South)
Welsh, Michael (Doncaster N)


Godman, Dr Norman A.
Wilson, Brian


Hughes, John (Coventry NE)



Illsley, Eric
Tellers for the Noes:


Jones, Martyn (Clwyd S W)
Mr. Frank Haynes and


Kennedy, Charles
 Mrs. Llin Golding.

Question accordingly agreed to.

Bill, as amended (in the Standing Committee), to be further considered this day.

Mr. Frank Dobson: On a point of order, Mr. Deputy Speaker. I should be grateful if you could tell us whether you were notified of the intention of the new Leader of the House to make a business statement after midnight. Certainly the Opposition were not so notified—[Interruption.] Given the chiacking of those opposite, normally referred to as the Conservative party, one would have expected them to endorse the idea that the customs and practices of the House should be carried out.
I think you will confirm that, certainly within the memory of any Opposition Member, it has been the custom and practice of the Government to inform the Opposition in advance of any intention to make a business statement in the House. We regard it as a most inauspicious start for the new Leader of the House, the first time some sort of crisis occurs, not to follow the usual courtesies. Therefore, I should be grateful to know whether you, Mr. Deputy Speaker, were notified in advance. It is only right that hon. Members should know such things in advance so that they can be in their places if they so wish.
Let me take this opportunity to make it clear that, from 9 o'clock this evening, the official Opposition received no approaches whatever from the Government about any of the matters under consideration. [Interruption.] I understand from the cries from the Government Benches that many Conservative Members were not around. Opposition Members were present. This shambles, like the shambles of the carry-over Session, results from the Government's incompetence and inability to plan or to pass their legislation.
In view of the fact that 18 months ago I was criticised by Mr. Speaker for not making our protests about guillotine motions clear, it is proper for me to register the

fact that we are entirely dissatisfied about not receiving the usual warning or usual courtesies that make the usual channels possible.

Several Hon. Members: rose——

Mr. Deputy Speaker: Order. I shall deal with this point of order first. I was not in the Chair at the time, but I understand that the hon. Member for Holborn and St. Pancras (Mr. Dobson) is under a misapprehension. The Leader of the House rose to move that further consideration of the Bill be now adjourned. In doing so, as he was entitled to do, he made a speech. It is not customary for the Chair, or anyone else, to receive notice of such a motion.

Mr. Dobson: Why have I in my possession, supplied by the Government after the statement was made, a statement that reads:
Business of the House.
With permission, Mr. Speaker, I should like to make a short statement about the changes in the business for this week"?
How was it possible for the people working the annunciator to display "Business Statement" on the annunciator when the Leader of the House rose, giving some hon. Members the opportunity to scurry into the Chamber? Why were we not given the normal warning?

Several Hon. Members: rose——

Mr. Deputy Speaker: Order. Let me deal with this point of order. I can only repeat what I have told the hon. Gentleman, which is that what happened was perfectly in order. It may be, and I shall make inquiries about this, that when the annunciator operators realised that in moving the motion the Leader of the House had made a statement about future business, they thought it might be of some assistance to display that for the House. I repeat that what happened was perfectly in order. The Leader of the House rose to move that further consideration of the Bill be now adjourned and made a short speech. It is not normal for the Chair, or anyone else, to be informed of when such a motion is to be moved.

Mr. Cryer: On a point of order, Mr. Deputy Speaker. The fact is that two items were dealt with. One was the motion that debate on the Companies Bill be adjourned, but there was a separate issue. The Leader of the House used the words "business statement" and announced changes in this week's business to the House. You, Mr. Deputy Speaker, were not in the Chair when I raised a point of order with Madam Deputy Speaker and asked for questions to be allowed. However, because the Leader of the House had not distinguished between the two items clearly, we continued by discussing the motion on the reporting of progress on the Companies Bill.
The changes that the Leader of the House has announced for the business for the week are still outstanding. I cannot recall any occasion when a business statement was made—those were the words that the Leader of the House used—but hon. Members were denied an opportunity to ask questions. I was denied the opportunity to finish my speech, but I would have incorporated questions to the Leader of the House in it, expecting him to reply at the end of the debate. That was stopped by the closure motion, which was accepted rather prematurely after only an hour and a half of debate.

Mr. Deputy Speaker: Order. The hon. Gentleman is a very experienced parliamentarian. I am sure that he is not casting aspersions on the judgment of the Chair, but it sounded rather like that.

Mr. Cryer: If I can explain, Mr. Deputy Speaker. I was taking into account the fact that there is a convention that, ordinarily, a debate lasts two hours before a closure is accepted, but, occasionally and unusually, Mr. Speaker or a Deputy Speaker may accept a closure within a short time. This clearly must have been one of those occasions.
Surely hon. Members should be allowed to ask questions on the business statement, as is the usual custom and practice of the House, long hallowed by the tradition of this place. As the Leader of the House used those words, it seems only right and proper that we should be given such an opportunity.

Mr. Spearing: Further to that point of order, Mr. Deputy Speaker. I have some sympathy with the Leader of the House, having got into an office when there are several unique problems. I can understand the difficulties. However, although, as you say, it was absolutely in order to make a short speech in moving the adjournment of the debate and to explain the reason why that was being done at that time, the absence of the usual courtesies and practices of the House precluded any hon. Member from asking questions about the business statement. That is of great importance.
Strictly speaking, in accordance with your ruling, Sir, no statement has yet been made. All we have had is a speech from the Leader of the House supporting his motion for an adjournment, which has now been passed, but we have had no statement as such. I saw the annunciator when I was in the Library, so I hastened to the Chamber, but I was too late to hear the statement by the Leader of the House.
Would it be proper and in accordance with the practice of the House for the Leader of the House to make a statement—I think that we have a short text—and then for short questions to be asked? I have a question which I have not been able to ask and which is consequent upon the statement. If I cannot do so that way, I wonder whether I can do it through a point of order, because it is a point of order about Friday's business and its conduct.

Mr. Nellist: Further to that point of order, Mr. Deputy Speaker. Neither you nor I were in the Chamber at 12 midnight when the Leader of the House moved the adjournment motion and announced a change of business. I was in my office upstairs, three floors above the Chamber, when, at 12 o'clock, the annunciator indicated a business statement. I suspect that 95 per cent. of hon. Members in the Chamber at the moment were not in the Chamber at 12 o'clock.

Mr. Cryer: They were boozing. That is the truth.

Mr. Deputy Speaker: Order. This is not a point of order for me. [Interruption.]

Mr. Nellist: If the lager louts opposite would belt up for a second I might be able to state my point of order.
I suspect that 95 per cent. of hon. Members currently in the Chamber were not here at 12 o'clock, because—[Interruption.]

Mr. Deputy Speaker: Order. The hon. Member must come to the point of order.

Mr. Nellist: I shall try to do so, Mr. Deputy Speaker.
The annunciator did not warn of the statement. That has become the practice in recent months and years when business statements are about to be made. I have two questions. First, in future, will you, Mr. Speaker, other Deputy Speakers and the authorities in the House in charge of the annunciator system reconsider whether there must be clear guidelines on how much notice is given to the operators so that they can give a minimum amount of notice to hon. Members that a business statement is about to be made? I suggest at least half an hour.
Secondly, given that we had no notice, in support of my hon. Friends the Members for Newham, South (Mr. Spearing) and for Bradford, South (Mr. Cryer), will you now allow questions on the business statement to be put so that hon. Members who are now in the Chamber can ask questions?

Mr. Frank Haynes: Further to that point of order, Mr. Deputy Speaker. I sympathise with the Leader of the House. He has been flying around the world for the past five years and he is a bit out of touch with the procedures of the House. He has had to consult the Tory Chief Whip to find out what to do—[HON. MEMBERS: "He cannot hear you, Frank."] You can hear them, Mr. Deputy Speaker, but you are not doing anything about it.
I have been in the Chamber all night. The Leader of the House stood at the Dispatch Box and said that he was going to make a business statement—[Interruption.] The Leader of the House may shake his head and say that he did not say that. I heard him say that. He made his statement about the change in the business for tomorrow and Friday.
I want you to clarify this, Mr. Deputy Speaker. The Leader of the House is denying this by shaking his head, as he did in response to my hon. Friend the Member for Bradford, South (Mr. Cryer). I hope that Hansard is not fiddled with. That is the danger, and that would be entirely wrong.

Several Hon. Members: rose——

Mr. Deputy Speaker: Order. I have allowed these points of order to continue for a long time. They are an extension of the motion with which we have already dealt. I can only repeat that the motion that we debated, during which some hon. Members spoke at length and were able to deploy their arguments, was perfectly in order. It was moved by the Leader of the House and the House eventually reached a conclusion on it. It is wholly out of order to extend the debate on a motion on which the House has reached a conclusion. Furthermore, I have a shrewd suspicion that we may return to this subject tomorrow—or today.

Mr. Dobson: Further to that point of order, Mr. Deputy Speaker. You have rightly ruled, and I recognise your difficulties because you were not in the Chair at the material time, as they would say in court. I was not in the Chamber at the material time either. Having been here all evening, I was having a cup of coffee. I was not warned about the statement and neither were the Opposition Chief Whip and Deputy Chief Whip. No one was warned. Whether or not that is in order, it is plainly contrary to the usual practices.
The present Leader of the House's predecessor and Chair of the Services Committee announced some time ago that it would be the practice to warn Members of the


imminence of a statement with an announcement on the annunciator. If we are to receive warnings only when it suits the Government, that undertaking was not worth the breath he spent on it.
In view of the fact that, like me, you were not in the Chamber at the material time, will you consult with those who were in the Chamber and with Mr. Speaker to ensure that in future the customary warnings are given? Had they been given, we could all have gone home some time ago.

Mr. Deputy Speaker: I am satisfied that my ruling is correct. The points that the hon. Gentleman is raising now are not for the Chair. They would be better dealt with through the usual channels.

Several Hon. Members: rose——

Mr. Deputy Speaker: Order. I have already allowed points of order, which have been an extension of a debate that was concluded some time ago, to continue for a considerable period. I am not prepared to take any further points of order on the same subject. If there are points of order on a different subject, I will take them. We must be fair to the rest of the business of the House. Hon. Members on both sides of the House are waiting patiently to take part in an important debate on merchant shipping.

Several Hon. Members: rose——

Mr. Deputy Speaker: Order. I will take no further points of order on the previous issue, which I have dealt with clearly and on a number of occasions. If there are different points, I will hear them.

Mr. Spearing: On a further point of order, Mr. Deputy Speaker. As one of those who is waiting for the next debate, I thank you for that remark. Please stop me if the point of order that I am about to raise is within the category you have mentioned.
Can you tell us what is likely to happen on a point of order on Friday as to the suspension of the rule to permit any form of business of which we have heard?

Mr. Deputy Speaker: The hon. Gentleman knows very well that the Chair is never prepared to rule on a hypothetical situation, which may or may not arise on Friday.

Mr. Spearing: Further to that point of order. Mr. Deputy Speaker. Is it not within the knowledge of the House that some change in the arrangements for Friday is now within the official knowledge of the House? In accordance with your ruling, which I would not challenge for one moment, is it not possible to question the Leader of the House on that matter? It has been the custom to do so under other circumstances, and no doubt that custom will return. Will the Leader of the House be able to enlighten us on this matter arising out of a point of order on business for Friday? Many people who will want to come to the business that he has advertised will want to know at what time and until when that business is likely to be taken.

Mr. Deputy Speaker: I believe that the hon. Gentleman is forgetting that I assume that there will be a business statement tomorrow in the normal way. The House will have an opportunity to question the Leader of the House then. Surely that is the practical solution to what the hon. Gentleman has suggested.

Mr. Wallace: Further to that point of order, Mr. Deputy Speaker. I accept fully the ruling that you have just given. If I understand it correctly, you said that, in moving the adjournment of the previous debate, the Leader of the House imparted information, in a supporting speech, regarding a change in the business. Is it a matter of order in this House for the business of the week to be changed in that way, or is a statement required?

Mr. Deputy Speaker: That is not a matter for the Chair.

Merchant Shipping

The Minister for Aviation and Shipping (Mr. Patrick McLoughlin): I beg to move,
That the draft Merchant Shipping Act 1988 (Amendment) Order 1989, which was laid before this House on 17 October, be approved.

Mr. Deputy Speaker (Sir Paul Dean): I should inform the House that Mr. Speaker has not selected the amendment in the name of the hon. Member for Thanet, South (Mr. Aitken).

Mr. D. N. Campbell-Savours: On a point of order, Mr. Deputy Speaker. I am sorry to delay the House, but I want to raise an important issue. I was sitting in the Tea Room and I watched the shadow Leader of the House sprint to the Chamber——

Mr. Frank Dobson: indicated dissent.

Mr. Campbell-Savours: No, Frank, that is correct, the word is sprint. My hon. Friend sprinted to the Chamber because he had no knowledge of what was happening in here as he had not been given notice.

Mr. Deputy Speaker: Order. I have dealt with that point. I call Mr. McLoughlin.

Mr. McLoughlin: The order gives effect to an interim order of the president of the European Court of Justice made on 10 October 1989. The interim order by the court requires the United Kingdom to suspend, until judgment in the main proceedings, the application of the British nationality requirements for registration of certain fishing vessels set out in section 14(1), (2) and (7) of the Merchant Shipping Act 1988. The affected fishing vessels are those that were fishing under the British flag up to 31 March 1989 with a licence granted under the Sea Fish (Conservation) Act 1967.
The court order is in restricted terms. It requires the United Kingdom to suspend the application of the British nationality requirement as a condition for the registration of fishing vessels as British fishing vessels to the extent that, at present, the owners, charterers, managers and operators of such vessels must either be British nationals, or in the case of a company, have at least 75 per cent. of its shares legally and beneficially owned by British nationals and at least 75 per cent. of its directors as British nationals.
The benefit of the court order is restricted to nationals of the European Community. It does not affect the requirement that such persons must be resident and domiciled in the United Kingdom. Morevoer, it does not affect the requirement that the vessels should be managed and their operations directed and controlled from within the United Kingdom. We do not know how many additional fishing vessels will now become eligible for registration on the United Kingdom fishing vessel register. That will depend on how many have been ineligible for registration by reason only of the nationality requirements that are changed by the order.
It might help if I fill in some of the background here. Part II of the Merchant Shipping Act 1988 introduced a new register of British fishing vessels. The main intention of this register was to restrict sea fishing rights so that the

fishing quotas granted to the United Kingdom under the common fisheries policy benefited the genuine United Kingdom fishing fleet and the British communities dependent upon fishing. There were at the time a large number of fishing vessels that were fishing against the United Kingdom quotas, operating largely out of Spanish ports, and which had only a nominal British connection.
The fishing vessel register came into full effect on 1 April 1989, but vessels could transfer to it from old registers on or after 1 December 1988. Since then the overwhelming proportion of the United Kingdom fishing fleet, numbering over 10,000 vessels, has been registered in circumstances where my right hon. Friend the Secretary of State has been satisfied that they comply with the requirements of the Act. One hundred and twenty one have been refused registration primarily because they have not been able to demonstrate that beneficial ownership is British or that the vessels are managed, directed and controlled from the United Kingdom.
In the meantime, the European Commission on 10 August 1989 instituted an action under article 169 of the EEC treaty alleging that the United Kingdom had, in its imposition of the nationality requirement in sections 13 and 14 of the 1988 Act, failed to fulfil its obligations under the EEC treaty. The United Kingdom is defending these proceedings.
The Commission also brought an application for interim measures under article 186 of the treaty asking the court
to order the United Kingdom to suspend, as regards nationals of the other Member States, the nationality requirements enshrined in sections 13 and 14 of the Merchant Shipping Act".
Judgment in respect of that application was delivered on 10 October and the order concerns that judgment alone. My hon. and learned Friend the Solicitor-General robustly argued the case for the United Kingdom on the grounds that, among other things, interim relief ought not be ordered where the Commission's case on the incompatibility of the nationality conditions with Community law was weak. In particular, he argued that a state has the right and duty under international law to prevent the abuse of its flag and to lay down the conditions for registration of ships that will fly its flag. He further submitted that the nationality requirements at issue were both consistent with international law and necessary to uphold the system of national quotas under the common fisheries policy, which are based on nationality.
The House will remember that the common fisheries policy was negotiated in minute detail by Ministers from each member state in a whole series of monthly meetings in Brussels when this system was set up in 1982–83. However, the court accepted the Commission's view that there was a prima facie case against the United Kingdom on the nationality issue and also that in the meantime certain "quota hoppers", particularly Spanish vessels that had hitherto fished against United Kingdom quotas, were suffering loss. The court, therefore, made its interim order to limit the loss of these fishermen pending the outcome of the main action—provided that they were able to satisfy the other conditions for registration to which I have already referred.

Mr. Jonathan Aitken: At this point in his interesting narrative, perhaps my hon. Friend could clarify one point. Is it correct that, immediately prior to the passage of the Merchant Shipping Act 1988, the


United Kingdom Government showed the text of the Act to the European Commission and were given clearance for it as being compatible with European law at that time? If that is correct, how on earth have these curious legal actions now come about?

Mr. McLoughlin: I should point out the difference between the Commission and the European Court, which is what we are discussing tonight. [Interruption.] However, these points will he covered by my hon. and learned Friend the Solicitor-General who will seek to catch your eye, Madam Deputy Speaker, at the end of the debate.
The United Kingdom is obliged to give effect to the European Court order, which is why this order is before the House for approval. I said earlier, it is not certain what precise effects the relaxation of the nationality requirement will have. It may be very little since, as was recognised by the Commission itself, no more than a few fishing vessels are considered likely to be able to meet the other requirements which remain in force.

Several Hon. Members: rose——

Mr. McLoughlin: I would rather not give way now, for the simple reason that a number of hon. Members want to speak in the debate, and there will be time later for my hon. and learned Friend to reply to the debate.
I refer to the requirements for residence and domicile in the United Kingdom and the direction and control of operations from the United Kingdom, which will still need to be satisfied.

Mr. William Cash: rose——

Mr. McLoughlin: It is of course possible that certain Community nationals might decide to take up residence in the United Kingdom, but this would require positive action, which would include setting up their permanent home here.

Mr. James Wallace: rose——

Mr. McLoughlin: In any event—[Interruption.]

Madam Deputy Speaker (Miss Betty Boothroyd): Order. It seems to me that the Minister has said that he is not prepared to give way at this stage. Hon. Members should not persist when that has been made clear.

Mr. McLoughlin: It would continue to be necessary in all cases to establish that beneficial ownership, management and direction and control of vessels rests within the United Kingdom. It would not be enough merely to have token representation in this country——

Mr. Wallace: The hon. Gentleman is thick.

Mr. McLoughlin: If the hon. Gentleman is so interested, perhaps he should be prepared to listen.
The Government's objective remains to take all proper steps to ensure that the benefits of the United Kingdom quota under the common fisheries policy accrue to the genuine United Kingdom fishing fleet—but, of course, all such steps must be in accordance with EC law. Since the European Court of Justice has required, on an interim basis, that that portion of the 1988 Act concerning the nationality requirements for registration be suspended pending full argument and the final decision in this case, I ask the House to approve the order.

Dr. Norman A. Godman: I offer my congratulations to the Minister on his new portfolio. I also offer him my condolences on having to perform the unwelcome role of ministerial messenger boy for the European Court of Justice and the Commission.
The order plainly shows that even the most recently enacted legislation in this Parliament is subject to a superior and more powerful court than any in the United Kingdom. The matter raises profound constitutional implications for Parliament and the people employed in the fishing industry.
This is not the first time that the Government and Parliament have been pulled into line by the European supreme court in Luxembourg. The Government were obliged to change section 37 of the Social Security Act 1975 because of an order from the court. It was amended in section 37 of the Social Security Act 1986. Similarly, the Government had to accept a ruling from the court concerning imports of long-life milk from France and other member states.
I am sure that the Minister will correct me if I am wrong in saying that no member state has sought to reject a ruling from the court. Am I right in thinking that this is the first time that Parliament and the Government have been instructed to amend a recent Act of Parliament by way of an interim injunction issued by the president of the court sitting on his own for half a day? When the injunction was announced a fortnight ago, the EC Fisheries Commissioner, Senor Manuel Marin, claimed—I suspect gleefully—that this was the first time in the history of the Community that the Court of Justice had revoked an application of a national law as a result of an interim injunction. This is a very serious matter for Parliament arid fishing. I am sure that the hon. Member for St. Ives (Mr. Harris) agrees.
Why have the Government responded with such astonishing alacrity? In all cases concerning substantive judgments made by this supreme court, the Governments concerned, including this one, have taken several months at the very least to amend the offending national legislation or regulations. Why the unseemly haste? I suppose that the Minister will cite the urgency of this matter and say that Spanish fishing interests are experiencing severe financial difficulties. I have news for the Minister. Many of our fishing interests are experiencing financial nightmares, from the south-west of England to the north-east coast of Scotland and the west coast of Scotland.

Mr. Wallace: And further north.

Dr. Godman: I beg the hon. Member's pardon. They will not forgive me in Shetland for that.
Can the Solicitor-General, who is to wind up this disgracefully short debate, confirm that six other member states discriminate according to nationality? I believe that I am right in saying that France, Belgium, the Federal Republic of Germany, Spain—not surprisingly—Denmark and the Irish Republic discriminate according to nationality, and reserve to their national fleet the quotas that are allocated to each country each year by the Council of Ministers. If that is the case, why has the United Kingdom been singled out ahead of these other


transgressors? We are having to amend an Act of Parliament which came into force only in January this year.
I have considerable sympathy for the legitimate points of order that were raised on this matter this afternoon by the hon. Members for Southend, East (Mr. Taylor) and for Aldridge-Brownhills (Mr. Shepherd) and by my right hon. Friend the Member for Swansea, West (Mr. Williams). The hon. Member for Southend, East raised an important point when he argued that the matter is sub judice given that other cases concerning nationality are due to be heard in the near future.
If this supreme court is conjoined with our courts, why do we have to accede with such alacrity to an interim injunction? It is disgraceful that we are debating this issue at such a late hour and for just 90 minutes.
I said earlier that this is a most important matter for our fishing industry. I remind the House of the comments made by the right hon. Member for Southend, West (Mr. Channon) when he was Secretary of State for Transport and speaking on Second Reading of the Merchant Shipping Bill. He said:
Part II deals with the very serious problem of foreign-owned fishing vessels registering in the United Kingdom in order to fish against our EC quotas. This is, I know, a matter of concern to hon. Members who represent fishing constituencies. … These are stringent requirements, but we believe they are essential if British fishing quotas are to be preserved for British fishermen. They have been carefully drawn up in consultation with the fishermen's organisations and widely welcomed by them."—[Official Report, 28 January 1988; Vol. 126, c. 510.]
My right hon. and hon. Friends and I wholeheartedly supported the Bill. There was no Division on Second or Third Reading.

Mr. Alex Salmond: Will the hon. Gentleman give way?

Dr. Godman: No, not for the moment.
The Minister said that this interim injunction does not affect the requirement that such persons must be resident and domiciled in the United Kingdom. Will the Minister explain those words? Does it mean that if I were Jose Romero, a Spanish fisherman, I would simply have to announce my intention to live here?—[Interruption.] I agree that I do not look very Spanish. Are there to be reciprocal arrangements whereby British fishermen can fish against, for example, the Spanish quota?
The Minister said that there are now about 10,000 fishing vessels on the register. He also said that he is not sure how many additional vessels may now become eligible for registration. Is it the Minister's intention to appoint a team of inspectors to assess the eligibility of applications for registration? Does the Minister agree that the injunction confounds the system of national quotas? Does he agree that the system of national quotas, based upon nationality, is the keystone of the common fisheries policy?
My fear is that the injunction may encourage other fishing interests in Spain and elsewhere to set up home in the United Kingdom. I also believe that the interim judgment will arouse considerable concern in the fishing industry that the Spanish fishing interests may lay siege to the common fisheries policy in terms of access to grounds and quotas. The brutal truth is that there are too many fishermen chasing too few fish in European Community

waters and elsewhere. With section 14 of the Merchant Shipping Act 1988 the Government understandably sought to restrict access to United Kingdom quotas. That endeavour has been demolished by the interim order.
The European Commission has told Her Majesty's Government, by way of the multiannual guidance programme, that the United Kingdom fishing fleet has to be reduced by over 22 per cent. by the end of 1991. In other words, fishing capacity must more closely match the demands to conserve the various stocks.
The judgment flies in the face of the sensible management of our fisheries stocks. It makes the need for a decommissioning scheme much more urgent. I know that the Ministers concerned are somewhat reluctant to introduce such a scheme because they were humiliated by Humberside trawler owners during the period of the previous scheme. Despite that continuing embarrassment, Ministers should agree to such a scheme and other conservation measures in order to protect fishing communities throughout the United Kingdom. The people in those communities, from Cornwall to Shetland, deserve nothing less. The Government, the European Court of Justice and the European Commission have failed those decent and honourable citizens of ours.

Mr. Jonathan Aitken: This is a pretty miserable nocturnal parliamentary occasion. Perhaps the only agreeable aspect for Conservative Members is that we are able to give a warm welcome to our hon. Friend the Minister on his debut at the Dispatch Box. We wish him well in his responsibilities. I wish that he had been able to deal with an easier subject and that he had had an easier debut. I felt that he was in the role of Postman Pat delivering an unpleasant letter to the EEC. He was bustling on his round as if he had in his sack an unpleasant smelling piece of merchandise that he did not want to examine too closely.
I have said that this is a miserable occasion and I agree with most of what was said by the hon. Member for Greenock and Port Glasgow (Dr. Godman). To anyone who cares about our Parliament, its historic sovereignty and, above all, its continuing ability to make laws for the protection of our citizens in the fishing industry or elsewhere, the wretched little order marks a humiliating and important defeat because it is an historic surrender of some constitutional importance.
This is not one of the usual common-or-garden irritating European directives which harmonise lawnmowers, make us put identical health warnings on cigarette packets or adjust our clocks in summertime when we do not want them adjusted. This is far more constitutionally profound. I shall try to take the House to the high ground of principle so that we can see the great issue that matters to any nation state and that is so woundingly being corrupted and compromised by the request that the Government have put to the House.
We need hardly remind ourselves when we debate fishing that we are a maritime nation and an island people. Throughout our history we have been surrounded by the sea and from time immemorial we have looked to our Parliament to protect our territorial waters from incursion, to safeguard our fishing grounds and staunchly to defend the livelihoods of all those who, in the beautiful words of Archbishop Cranmer,


Go down to the sea in ships and occupy their business in great waters.
There is nothing anti-European in such a stance. After all, since its inception the EC fisheries policy has always been based on the principle that nation states have national quotas. EC shipping law allows any member state to lay down national conditions for the registration of ships and the flying of flags. That is a basic point of EC law and national law.

Mr. John Prescott: And international law.

Mr. Aitken: As the hon. Gentleman says, it is also a basic point of international law.
It was in pursuance of the principle of nationality in fishing matters that the House passed the important Merchant Shipping Act 1988. Section 14 of that Act was of pivotal importance because it inserted what is no more than a normal safeguard that a British registered fishing vessel should be British owned. That means either owned by Britons or by a company which can be shown to be predominantly in the ownership of British shareholders. That is what is meant by "qualified person" or "qualified company" in that section of the Act.
That section was put forward to avoid a familiar form of cheating in international corporation activity, the erection of a brass plate behind which shareholders who are not British nationals can hide. The former Secretary of State for Transport, my right hon. Friend the Member for Southend, West (Mr. Channon), got it absolutely right when on Second Reading of the Merchant Shipping Bill he said:
These are stringent requirements, but we believe they are essential if British fishing quotas are to be preserved for British fishermen."—[Official Report, 28 January 1988; Vol. 126, c. 510.]
We expect no less from a British Secretary of State and a British Parliament.
If the House cannot protect our fishing grounds and our fishermen, what can we do? I am glad to hear that my hon. Friend the Member for Thurrock (Mr. Janman) has been diligently researching the Division lists and has found that every member of the Government Front Bench tonight voted loyally for section 14 to be implemented. My hon. Friend the Member for St. Ives (Mr. Harris), who occupies such a prominent position in the great hall of fame of Euro enthusiasts, having been Parliamentary Private Secretary to the former Foreign Secretary, went out on a limb and eloquently supported section 14. He attacked the wicked Spanish companies behind their brass plates when he said:
The harm that they have caused to our fishing interests is considerable. At long last we have the legislation for which I … have been fighting for many years."—[Official Report, 28 January 1988; Vol. 126, c. 532.]
He may have fought for it for many years but we shall shortly lose it. My hon. Friend's words will take some eating. In about 40 minutes we shall not have the legislation for which he fought. One little puff of Euro wind and it will be gone. The legislation for which my hon. Friend fought for so long and about which the Government went into battle will be lost.
I do not know how my hon. and learned Friend the Solicitor-General, on whose shoulders so much rests, will explain all this, but, knowing him, I expect that we shall hear an eloquent appeal to honour the rule of law. I can hear the sonorous phrases that he will shortly roll off.
What law? The European Court of Justice has been hopping about on this issue like the worst type of kangaroo. It reminds me of that famous passage in "Alice's Adventures in Wonderland" which says "Sentence first, verdict afterwards."
All the precedents show that a European court always first decides in such cases on the issue of principle as to whether legislation by a member state is or is not compatible with Community legislation. All the signs were that it was compatible. We went, cap in hand, clutching our forelocks, to the European Commission in the first place and asked, "Is our legislation, the Merchant Shipping Act 1988, all right?" and we were told that it was all right. We were allowed to pass the Act, and the next minute it was litigating against us in court. That is not the action of good friend or partner. If the people in the Commission can bless us one minute and bring litigation against us the next, they cannot be very nice.
I cannot understand why the normal procedures were not followed by the extraordinary Euro-court, why a considered judgment on the compatibility issue was not handed down, and why that was not argued carefully. Then, if it demonstrated that national laws had to be suspended, because three wise judges had handed down judgments that everyone had to look at, at least we could see the clear legal basis for the decision.

Mr. Cash: On a number of occasions tonight we have had references to a suspension in consequence of the interim order. However, that is not what the order does. It amends the Act. It says:
so long as this order remains in force
it will
have effect as if".
We may be dealing with a provision that gives the impression that it is suspending when it is amending, which is different.

Mr. Aitken: I take my hon. Friend's point. We are being asked to amend the Act. I was dealing with what the court had said, which is that it should be suspended.
The court shows breath-taking arrogance. It clearly has no idea how much these issues matter to fishermen, fishing communities, or ports—one of which I represent. In a journal called the Eurofish Report, I read a curious paragraph headed, "Two little words". That makes it sound like a nursery rhyme. It says:
The Court president's ruling demands simply that the UK now removes the two words 'British citizen' from that Section 14(7) definition of what is a 'qualified person' and 'qualified company' as it applies … It therefore acknowledged the Commission argument that such use of 'British citizen' in this context constitued 'direct discrimination' in flagrant breach of Article 40(3) of the Treaty of Rome.
I find that breath-taking. Delete "British citizen" and insert "foreign owner", and the whole basis on which our fishing legislation and our national legislation in key strategic sectors has been based is cheerfully swept away on the basis of one judge giving an interim judgment.
My hon. Friend the Under-Secretary did his best to take on this legal brief and explain all the legal arguments deployed in favour of killing off this injunction, but he is no lawyer, and he should have added in brackets at the end of every sentence, "And we lost." The Government have had so much practice in fighting injunctions in the courts of the world ever since the Peter Wright industry got going that one would have thought that they could stop one


judge in a Euro-court putting down a change of our law that sweeps away the great principles not just of our legislation but of international law.
The moment when the Roman empire was known to be in total collapse and disarray was when three little words no longer had any importance or any impact, and the power of the Roman Senate and the Roman emperors no longer carried any weight. Those three words were, "Civis Romanu, sum". Here, we are deleting "British citizen" from an Act. This is a sad night for parliamentary democracy and sovereignty, and I shall vote against the order.

Mr. James Wallace: I begin by congratulating the Minister on what I understand is his maiden speech at the Government Dispatch Box. When he refused to allow me to intervene and I persisted in challenging him, I have no doubt that he recognised that those of us who represent coastal constituencies—in some instances rather landlocked ones, but perhaps that is not his fault—reflect the passion that has been generated by the order. That is especially true of those of us who represent fishing constituencies.
It is clear from the previous contributions to the debate that there is widespread agreement about the importance of the Merchant Shipping Act 1988, a measure which received support from both sides of the House when it came before us for consideration. I believe that the support for it was such that it was enacted without a Division. It is a fact that it enjoyed all-party support, and we are all aware of the abuse which it was intended it should tackle. Spanish vessels were coming on to the British register. Alternatively, British vessels were being acquired and beneficially owned by people with substantial Spanish interests. In that way the Spanish fishing industry was getting round the restrictions that were placed on its fleet when Spain became a member of the European Community.
That did immense damage to our fishing industry in all parts of the United Kingdom. As the hon. Member for Greenock and Port Glasgow (Dr. Godman) said, the industry was damaged from Cornwall to Shetland. The Spanish have been able to fish our quotas and add tonnage to our total fishing capacity, thus placing great difficulties in the way of the industry. Our tonnage has to be reduced to meet the targets that are set under the multi-annual guidance programme. I do not think that there is any doubt about the abuse that we have been trying to tackle.
We could claim, and we did, that there was jusification for our approach given the heavy emphasis that has been placed on nationality. The quota system for fisheries is based on nationality, which is an exception to the general approach of a Communitywide application of rules. That provided a justification for the arguments that we advanced.
It appears that the British proposals were submitted to the Commission and that the nod was given. In that context it is surprising that the Commission is taking the British Government to court. It would be reasonable, even at this stage, to put the ball into the Commission's court and say, "The Community has agreed. There is a Community agreement that quotas should be divided on a

national basis. You are aware of the problem that we are highlighting. For these quotas to be effective, it is only right that national fishing fleets catch the national quota. How do you, the Commission, suggest that we should respond to the abuse which everyone recognises?".
If the Government had not used up so much good will and political capital in fighting specious battles on issues such as the print size of the warnings on cigarette packets, they might have had a stock of credit and might have been able to advance the argument that I have outlined. They have frittered away good will in responding to so many diverse issues, and when a real national issue arises they find that they have precious little to fall back on. In this instance it is the fishing industry that will suffer.
What effect will the passing of the order have on the number of boats that might be able to come on to the register? The Minister has said that he does not know, but submissions have been made to the European Court by the Solicitor-General and others. They made it clear that the United Kingdom contended that the interim measures would be ineffectual. As I understand it, that meant that the measures would have no effect. The Minister is saying tonight something that is materially different from what the Solicitor-General submitted to the European Court. He seems to be saying that the measures could have some effect, but he does not know how much. We are entitled to have the guesstimate that his Department has made. We should be told what steps the Department is taking to try to quantify the effects in the weeks that lie ahead.
I congratulate the hon. Member for Greenock and Port Glasgow on his pointed and eloquent comments on the speed with which the Government have reacted to the interim measures, bearing in mind the time that they often take to respond to full decisions of the court. The valid argument of the hon. Member for Stafford (Mr. Cash) is that it appears that the court is asking us to suspend the relevant provision of the 1988 Act whereas the effect of the order, as I read it, would be to repeal it. As I understand section 2(2) of the European Communities Act 1972, the power given by Order in Council is to implement decisions of the Community institutions. Therefore, it is not necessary to repeal. It would be possible to suspend. Perhaps the Minister will explain why the chosen course is to repeal.
The Government have been speedy in tabling this order, but why have they not tried to devise some other provision that would achieve the same effect as that wished for through the use of the words "British citizen"? Section 14(3) of the 1988 Act gives the Secretary of State power, by regulations, to specify further requirements that must be satisfied if a fishing vessel is to be eligible for registration as a British fishing vessel. It states that it must appear
to the Secretary of State to be appropriate for securing that such a vessel has a genuine and substantial connection with the United Kingdom.
What further consideration have Government Departments given to bringing forward further orders to try to achieve the same end, but which would also be acceptable to the Community? As the hon. Member for Greenock and Port Glasgow said, how do other countries get away with it?
I was impressed when I read the speech of the hon. Member for St. Ives (Mr. Harris) on Second Reading of the 1988 Bill. He said:
How will the Minister or his officials determine that the provision is applied and obeyed. … I would thoroughly endorse what my hon. Friend the Member for Eastleigh (Sir


D. Price) said earlier—that perhaps we need to play by the French rules. It is instructive that, to my knowledge, not one Spanish vessel has been transferred to the French register. The French would not tolerate it for one minute.
If the French can make effective provision to prevent Spanish vessels being put on their register, why cannot the British Government do the same? The hon. Member for St. Ives asked that pertinent question, but I do not think that he received an answer. Perhaps we will have an answer tonight.
The hon. Gentleman also said:
My plea is to ensure that the legislation works. If it does not, the anger of fishermen, especially in Cornwall, will indeed be great. I hope and believe that it will work."—[Official Report, 28 January 1988: Vol. 126, c. 532–33.]
He had better watch out for the ire of the Cornish fishermen if he votes for this order. It will repeal the measure that he rightly championed 18 months ago.
If my hon. Friend the Member for Truro (Mr. Taylor) were not indisposed, he would be here saying these same things. Fishermen will be greatly angered and annoyed if the Government do not come up with some satisfactory means of meeting the particular abuse that we tried to cure in the 1988 Act.

Mr. David Harris: The hon. Member for Greenock and Port Glasgow (Dr. Godman) was a little churlish to say that the Government had not stood by the fishermen. I hope that he recognises that no one has worked harder or with more determination, right up through the House of Lords to the European Court, than my hon. and learned Friend the Solicitor-General.
Just what is the hon. Member for Orkney and Shetland (Mr. Wallace) advocating that this House should do? Is he saying that we should break the law, even one passed by a European Court? I do not believe that we should break the law, whether national or European. If the SLD, with all its pontificating about Europe, is now advocating that we should defy the European Court, let the hon. Gentleman say so.

Mr. Wallace: rose——

Mr. Harris: No, I cannot give way because of the time constraints. Other hon. Members wish to speak.
No one could take any pleasure or satisfaction from this order. It has been described as "wretched", and it is. The Government have no alternative but to bring it forward if they are to obey the law. If—[Interruption.] If people think that we should not obey the law, let them say so—[Interruption.] That applies to my hon. Friend the Member for Southend, East (Mr. Taylor), who is barracking me.
I stand by every word of my speech on Second Reading, which various hon. Members have kindly quoted this evening. I have been fighting this issue for a long time—probably about eight years——

Mr. Teddy Taylor: We can do nothing here.

Mr. Harris: In fact, we could have done something before Spain joined the European Community.
Before I was a Member of the House—when I was a Member of the European Parliament—I urged the Commission to take action on its front, and urged the House to take action on its front too. I hope that my hon. Friend the Member for Thanet, South (Mr. Aitken) will

explain to me after the debate what pressure he put on the House before Spain was a member of the European Community—when the problem was building up—to nip this in the bud. I was trying to press people to take action outside the House; I hope that he was doing the same when he was a Member of it.
In the immediate wake of the interim judgment, it has been said that only 10 or so Spanish boats will be allowed back on to our register. I believe that that is 10 too many: I do not want any Spanish boats on our register. I took pleasure in that long overdue legislation: I said in my speech that I hoped that it would work, and that it was no good having legislation if it did not.
I have a quarrel with the Commission, however. I believe that in bringing this action it is, in effect, driving a coach and horses through its own common fisheries policy. As other hon. Members have said, that policy is built on national quotas—which must mean quotas for our nation's own fishermen. I take issue with the views expressed by the European Court. Paragraph 35 of the judgment states:
The Commission makes the observation that the establishment of the new register of British fishing vessels has had the effect of forcing the entire 'Anglo-Spanish' fleet to remain idle … The owners of the vessels in question are suffering heavy losses as a result of the vessels' remaining idle".
Yes, I think that they are suffering heavy losses, but many of us warned them when they came on to our register by bogus means—which we were daft to allow at the time—that they should be aware of what they were doing, and that if they were tipped off the register, as many of us were advocating, that was their own fault and they should have their eyes open.
Of course—as other hon. Members have said—the fact that those Spanish fishing vessels have been fishing against our quota has caused great damage to our own fishermen, and to the standing of the industry and its economy. I have no sympathy at all for the Spanish boats. The issue to which we should now direct our thoughts is, "Where do we go from here?" I support the hon. Member for Orkney and Shetland: we should find other regulations by which to prevent those 10 or so boats from coming back on to the register.
I also believe, however, that there is an urgent need to take political action, and I applaud the steps taken by my hon. Friend the Minister to rally support from other member states against the pernicious practice of quota-hopping. I am delighted that he has—apparently—obtained support from Germany and Ireland. I urge him to redouble his efforts and to try to achieve a political solution—and to put pressure on the Commission to bring forward its own proposals.
We must stamp out the practice of quota-hopping. It has done immense damage; it is undoubtedly a serious setback; but it is not the end of the story. We must go on, and make sure that the Spanish boats do not come back on to our register. If they do, we must find means of getting them off it as quickly as possible, in the interests of our own fishermen. I hope that the House will unite on that point.

Mr. Calum Macdonald: As a member of the Standing Committee that considered the Merchant Shipping Bill, I share the dismay that has been expressed on both sides of the House at the way in which that


valuable section has been overturned in response to the interim ruling. As time is short, I shall not go over ground that has already been covered by other hon. Members, but we must not lose sight of the background that led to the crisis and to the need for tonight's measure. In concentrating upon the legal and constitutional matters, we should not lose sight of the crisis that fishermen are experiencing and that led to the desire to implement such a section in the Merchant Shipping Bill.
I suspect that the real significance of tonight's order is that it signals the beginning of the end of a common fisheries policy based on nations and national quotas. The current crisis in the fishing industry—the quota cuts, the gross failure to tackle the overcapacity problem, the consequential loss of FEOGA European Community finance from sections of the British fishing industry that desperately need that finance and the current debacle which has led to tonight's order—is evidence of the emerging bankruptcy of the common fisheries policy which, as has already been mentioned, is based upon the notion of national quotas. The court judgment refers to the principle of nationality which underlies the present common system in the European Community.
The root failure of that fisheries policy increasingly has been recognised, even by the European Commission in trying to get itself out of its current position. A Commission communication issued on 19 July proposes a Community framework for access to fishing quotas that appears to be moving away from a common system based upon national quotas, and shows a greater appreciation that even within a national framework distinctions between regions and localities have to be considered. Paragraph 2.5 of that communication states that
the sense of the special needs of those regions where the population is particularly dependent on fisheries and related industries must be viewed as one of the basic principles
that must underlie a common fisheries policy in future. The root problem is that the present common fisheries programme cannot distinguish between the different conditions which exist between regions and localities in Scotland, far less between Scotland and England. That failure has resulted in regions and localities getting dragged into a crisis which is none of their doing but which the present framework has made common to them all.
In my constituency in the Western Isles, we feel the squeeze in various ways. I have already corresponded with Ministers on those matters, and as time is short I shall not go through them. However, to get us out of the present crisis, three things must now be done. First, the Government must immediately introduce a decommissioning scheme or some other set-aside scheme. If the farmers can have such a scheme, surely the fishermen can have one too. I am taking the opportunity to raise these matters, as the Minister responsible for fisheries is in his place.
Secondly, the Government must develop a long-term strategy to reduce and contain the overall capacity of the national fleet. The Government plainly have been derelict in their failure to produce that strategy before now.
Thirdly, it is essential that the Minister develops a common fisheries approach with his European colleagues that distinguishes properly and clearly between the

different regions and localities of the European Community and the different regions and localities of the east and west coasts of Scotland.
A common fisheries policy must recognise the different styles of fishing and the different types of fleet in each locality. It must not unnecessarily and stupidly afflict one locality with the travails of another.
Until now, the Government's response to the fishing crisis that is breaking around our heads has been pathetic. I sincerely hope that the new Minister will have the vision and determination to tackle the problems at their root, where they must be tackled before it is too late.

Mr. Teddy Taylor: I congratulate the Minister on his appointment. I hope that he realises that this is a very special night, although we are considering the order at 3 am.
Last year, Parliament passed a law, following weeks of debate. We thought that that was the right thing to do and that it was consistent with European law. At the time, the Minister said that the legislation was essential to safeguard the interests of British fishing. Yet, not a court but one chap, Mr. Due, has told us to scrub it. For months we worked out how we could pass legislation that was consistent with the law of Europe, but tonight it is being temporarily suspended.
It is wrong and unfair to the British people for us to be discussing the order at 3 am, when nobody will hear about it. Whether it was right or wrong for the Government to ask us to debate it at this time of the morning, people should know what is happening, but Ministers know that they will not have the slightest idea. If one said to someone in the street, "Do you know that one chap sitting in a court can suspend a law passed by Parliament which it debated for months and discussed with European officials?" he would say, "What nonsense. Parliament is supreme." The Government should be ashamed of themselves for arranging for us to debate such matters at this time, when no one will hear about them. It is wrong and undemocratic.

Mr. Cash: Has my hon. Friend noticed that the order is made by Her Majesty the Queen? It is not made by a Minister and does not recite any power derived from statute other than the European Communities Act 1972. It is simply a prerogative order.

Mr. Taylor: My hon. Friend well knows that it does not matter two hoots whether we vote against the order, and I am sure that the Solicitor-General, who fights these cases so superbly, will confirm that.
We must stop kidding ourselves. People are saying that the order will affect only 10 vessels, probably 12 but perhaps eight. Why do they not also say that in two weeks time another case will start, about which we must give our final submission? The case is called Crown v. Factortame Limited and it will raise issues of residence. The idea that the order is limited is a load of rubbish. It may be a year or 18 months before judgment is passed in that case, but by saying that the order is limited we are kidding ourselves.
My hon. Friend the Member for St. Ives (Mr. Harris) was right. We must accept that we have joined the Common Market. Whether we like it or not, the court is constantly creating new powers, not because of laws but because that is the way things are going. Can we honestly


vote against this proposal? We can. The court made an interim judgment and said, "Please implement with urgency." How on earth is it fair and reasonable to the fishermen of Britain that we should implement something which discriminates against Britain and which does not apply to all members of the EEC? Is it not fair for us to say, "Yes, we will apply your judgment, but not until it applies to everyone"? If Spanish vessels claim to be British, why should we accept this measure until the same applies to all parts of the European Community?
When something as shameful and dreadful as this is done, why should it be that, when the papers arrived on 18 October, the Government should announce on 19 October that the matter will be debated in the next week? That is not the way to respond to such a dreadful loss of sovereignty. A huge increase of power is taken by the European Community.
What can we do? I hope that we will stop saying, "Let us have new discussions. Let us try to work out new policies. Let us have new negotiations." We must accept that, sadly and tragically, in this matter we are as effective as a county council.
On this sad night for Britain and for democracy, please will Ministers and Opposition spokesmen stop kidding themselves and pretending that things are as they are not? Please, will they accept things as they are? We should vote against the order, not because we are rejecting law and order, but because we are saying, "We will apply it when, as under the treaty of Rome, it applies to all countries of the EEC." If something nasty is driving a coach and horses through the common fisheries policy, let it apply to all members of the European Community. We should not say, "Reject law and order or the judgment." We should say, "We will apply the law, but it applies to all of us."

Mr. Alex Salmond: I will be brief, as other hon. Members wish to speak in the debate.
One of the problems with the hon. Member for Southend, East (Mr. Taylor) is that he is so wrapped up in his opposition to the European Community that he cannot see the Government's incompetence. At present it is not the European Community which is depriving fishermen of access to decommissioning funds or lay-off funds which would help in the current crisis; it is the total, drift and incompetence of the Government's fisheries policy. [Interruption.] The hon. Gentleman's relationship to the Secretary of State for Scotland is like Sir Alan Walters' relationship to the Chancellor, but he should let me make my speech, given the shortage of time.
Hon. Members should examine our proceedings in Committee—perhaps the hon. Gentleman has done so. They would then see that a succession of proposals to tighten up the legislation were presented to the Government by myself and other Opposition hon. Members. This is the third failed attempt to deal with flag of convenience vessels. We got no support from the Tory Members in Committee. On 18 February last year, I moved an amendment to extend qualifications to restrict flag of convenience vessels, not just to the directors of companies, with whom the Government are obsessed, but to vessel crews. It also dealt with nationality qualifications. I was told somewhat ironically that that would be contrary to and run foul of the European Court of Justice. The debate also dealt with the residential qualifications of

crews of fishing vessels. That is just as important when defining whether they are legitimately Scottish or English as who owns them and who the company directors are. We must look at the crews manning such vessels.
I was told by the Minister that my amendment was not necessary and that the legislation was watertight or "fishtight", as he put it. Given the judgment of the European Court of Justice, will the Government come forward with a residential qualification and stipulation in respect of the crews of fishing vessels and do something about this serious matter?
I will certainly vote against this measure. It would be incredible for anyone concerned with the fishing industry to vote for a measure when the Minister has told the House that he does not know the consequences that will follow if the order is passed this evening.
We should require the Minister to tell us what further measures, such as residential qualification or associating registration with proof of title, he will introduce to stop once and for all flag of convenience vessels pilfering the quotas of Scottish and English fishermen.

Mr. Michael Carttiss: This subject deserves long speeches without a time limit from every hon. Member. My hon. Friends have already commented on the absurdity of our discussing this measure at 3.25 am. However, I will be brief because I know that many of my colleagues want to speak.
The hon. Member for Greenock and Port Glasgow (Dr. Godman) expressed the feelings of many hon. Members very effectively. He referred to various fishing ports, but he did not refer to those in East Anglia. I come from Yarmouth and my distinguished predecessor in this House fought tooth and nail to prevent us from joining the European Community and running into these sorts of problems.
My hon. Friend the Member for St. Ives (Mr. Harris) has been quoted on many occasions because of his sterling fight for the British fishing interests. I pay tribute to him for that. My hon. Friend wants to know where we go from here. I will go back to Norfolk county council, where I started from, because, as my hon. Friend the Member for Southend, East (Mr. Taylor) said, we arc becoming more and more like a county council, closer even than those who wanted European integration.
My hon. Friend the Minister and my hon. and learned Friend the Solicitor-General have come to the Chamber tonight like grand old Dukes of York. They were party to leading us up the hill to vote for this excellent measure and we heard quotations from the then Secretary of State telling us how important it was that we voted for it. The grand old Dukes of York are now leading us down the hill, running from the European Court of Justice. That has nothing to do with not following the rule of law or not following international agreements to which we are party.
My hon. Friend the Member for Southend, East said that one man could overturn what we have spent many months in Parliament achieving. My hon. Friend is wrong. It is the Government's choice that we are being asked to do this now. The Government could have waited for the measure to face the full Commission and then brought it back for our consideration. If I were taken to court for a speeding offence because I was travelling at 30·5 mph in a built-up area, I would go to court. If I were found guilty,


I would pay my fine. However, it is worth contesting and it is worth contesting this measure in the interests of the fishing industry which has received very little help in recent years.
It has been said that there are too many fishermen chasing too few fish. We know that. However, why should all the fishermen be Spanish and have the support of other European countries, some of which have no interest in the fishing industry?
No one could accuse the Government, led by my right hon. Friend the Prime Minister, of kowtowing to or being supine before the EC. But this is an issue of vital importance to fishing and to the constitutional arrangements of this House. We should be standing firm.
Why make a fuss about cigarette packets? Does that matter a tinker's cuss? This issue is of enormous importance. We are talking about people's livelihoods and a fishing industry that has been decimated over the past 20 or 30 years and has virtually disappeared in some parts of the country, not least in my port of Great Yarmouth.
So, Madam Speaker——

Madam Deputy Speaker: The hon. Gentleman has elevated me somewhat.

Mr. Carttiss: It is only a matter of time, Madam Deputy Speaker.
The person who occupies the Chair in 10 years' time will be wasting his or her time if we allow this sort of order to be introduced every time the EC makes an interim injunction against us.

Mr. Brian Wilson: I shall be brief. We are entitled to pick up on the fact that the Government are pressing ahead without being able to give us any information about the implications of their actions. We certainly received no such information from the Minister. Seldom can any Minister at the Dispatch Box have blabbered through a speech and been so uncomprehending of what he was talking about.Will we get that information in the wind-up speech? What a pity that we shall not have a speech from a fisheries Minister who could tell us something about the fishing and legal implications of the interim decision.
We read in the Fishing News the reassuring words of the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food, who said:
We shall need to study the judgment carefully but we do not expect that it will have much real impact. It will not let a new armada of boats into the British fishing grounds".
That is poetic stuff, but it is scarcely reassuring. We have heard mention of 10 vessels, but the Minister told us that 121 Spanish vessels were refused registration. What proportion of those vessels will subsequently be eligible to apply for registration?
It is not just the number of fishing boats that matters, but the tonnage and catching power. The pressure stock licensing farce has shown us that one can have 10 small vessels and 10 large vessels. The implications go far beyond the mere number of vessels.
If the Government cannot give us any information about the implications of the decision, surely that is a pressing argument in favour of not proceeding at such breathtaking speed. I do not need to rehearse that

argument, but the speed with which Government have moved is bewildering. Why have the Government rushed to the House to push the order through on the basis of an interim judgment?
The hon. Member for Southend, East (Mr. Taylor) has followed a consistent line on this. Unlike many of us, he has not engaged in intellectual gymnastics to defend his position. The hon. Member for St. Ives (Mr. Harris) was right when he said that, in some cases, one defends the pro-European stance, but in others one advocates that the European law should be ignored. The Conservatives may represent the party of law and order, but, on occasions, it states that some European judgments should be ignored. Therefore, sometimes it is necessary to engage in intellectual gymnastics, but I pay tribute to the hon. Member for Southend, East who has never done so as he has always been consistent about Europe.
What we are discussing is not some great power of law and order, but the interim decision of one man. There is no obligation on the Government to act with such speed. I agree with the hon. Member for Orkney and Shetland (Mr. Wallace) that we could use next year to seek to achieve what is sought in the interim decision. That might not satisfy the anti-European stance, but it would defend our fishermen.
The Government give a low priority to fishing and peripheral matters. The French would not accept the interim decision for two minutes, but the Government have blundered on and have allowed that to happen. At the end of the day responsibility lies with the Government.
My hon. Friend the Member for the Western Isles (Mr. Macdonald) is right to say that a common fisheries policy, even within national boundaries, is an unsatisfactory mechanism. It is not nearly sophisticated enough to take into account the different nuances of the fishing industry around the shores of Britain and even within the northern half of Scotland.
The fishing industry on the west coast is very different from that in the north-east of Scotland. Indeed, it could even be said that in the past the problems of the west coast fishermen have been the east coast fishermen, more than any foreign fishermen. Because fishermen do not always see things in perspective, one of the ironies of history is that, in the referendum on EEC membership—I am sure that the hon. Member for Southend, East remembers this—those in the north-east fishing industry were among those who were deeply supportive of our entry into, or rather our remaining in, the European Community simply for their own short-term gain.
I assume that by now the right hon. Member for Suffolk, Coastal (Mr. Gummer) is safely tucked up with his prayer book and Horlicks. As a Tory Minister responsible for our fisheries, he must have set a record by winning in so short a time such an editorial in Fishing News as this:
Could it be that Mr. Gummer is all too well aware of the mess his government is in over the fishing industry—a mess they have largely created—and has decided that the best form of defence is attack?
The editorial concludes:
If he and his government are not prepared to work with the industry to try to resolve the problems, they need not be surprised at the result they will get at the ballot box when the time comes. Although, judging by Mr. Gummer's present attitude, Scotland must already be regarded as a hopeless case by the Tories. For, whatever else he may be, Mr. Gummer is not a fool or a political greenhorn.


We may dissent from some of those latter sentiments, but I am sure that the hon. Member for Southend, East, in his new role as eminence grise to the Secretary of State will take back the message that what the Tories are doing to the fishing industry in Scotland and in the rest of the United Kingdom is yet another nail in their coffin.

The Solicitor-General (Sir Nicholas Lyell): If I have to go into legalities at some stage, I hope that the House will forgive me, but I should first like to take a few moments to explain the interim judgment—I emphasise that it is only an interim judgment or order of the European Court—and to put it into context.
I know a great deal about this case. I have appeared at every level in—[AN HON. MEMBER: "You have lost what you knew."] The hon. Gentleman says that I have lost it, but I am afraid that that comment only shows how little he knows about it. It is a great mistake to say that we have lost this case. My hon. Friend the Member for St. Ives (Mr. Harris) was right when he brought the House to realise that that is not the case. I shall now put the position into context, adding only that I well understand the strength of feeling among hon. Members of all parties who represent fishing interests.
The hon. Member for Greenock and Port Glasgow (Dr. Godman) asked why we had to act so quickly. I must advise him and the House that the purpose of the draft order is to give effect to the obligations of the United Kingdom, arising from the interim order of the Court of Justice, which requires us to suspend the nationality requirements—the House should remember that it applies only to the nationality requirements contained in sections 14(1), (2) and (7) of the Merchant Shipping Act 1988 pending final judgment in the infraction proceedings brought under article 169 of the treaty by the Commission against the United Kingdom. Although the order of the court is only interim in nature and we shall seek to overturn it—I believe that we have reasonable arguments for overturning it—at the substantive hearing, it is our obligation to give effect to it without delay. The order is only given because there is urgency.
This country not only has a good record in obeying the law, we also have a good record in arguing vigorously and successfully in defence of our interests before the European Court of Justice——

Mr. Cash: rose——

The Solicitor-General: Perhaps my hon. Friend will allow me to develop my point a little further.
My hon. Friend the Member for Southend, East (Mr. Taylor) was anxious about the fact that, as he thought, this was a prerogative order, which it is not. We are implementing the order by exercising the powers of the Crown under section 2(2) of the European Communities Act 1972 whereby, subject to schedule 2 to that Act, Her Majesty may, by Order in Council, make provision for the purpose of implementing any Community obligation of the United Kingdom. Since this order involves amendment to key provisions of an Act of Parliament, we have chosen to adopt the affirmative resolution procedure, taking account, inter alia, of the view of the Joint Committee on Delegated Legislation in its second report of 1972–73 that

such procedure might normally be appropriate in this type of cause. That is what makes it proper to hold this full debate tonight.

Mr. Cash: Will the Solicitor-General give way?

The Solicitor-General: I want to develop my argument.
My hon. Friend the Member for Southend, East was anxious about the erosion of sovereignty, as were other hon. Members. This case involves no erosion of sovereignty over and above that which we accepted in 1972–73. While it is true that this is the first time that section 2(2) of the European Communities Act 1972 has been used to implement an order of the Court of Justice requiring the interim suspension of part of an Act of Parliament, it is no more than the exercise of a power pursuant to an obligation arising under the treaty of Rome—the obligation to give effect to an order of the Court of Justice. That obligation was accepted as part of the whole package of rights and obligations entered into by the United Kingdom when we joined the Community on 1 January 1973.

Mr. Cash: I have the greatest sympathy with the skill with which my hon. and learned Friend has sought to put the case on behalf of the Government in the Court of Justice, but does he agree that this order goes further even than the court requires? It not only suspends the Act in question—it amends it, which is more than the court is asking for.

The Solicitor-General: I respect my hon. Friend very much as a lawyer, but he is making a legalistic distinction without a difference. In realistic terms, this is a suspension——

Mr. Prescott: rose——

The Solicitor-General: I want to make it very clear to my hon. Friend the Member for Thanet, South (Mr. Aitken) that it is entirely mistaken to say that we have lost the case: we have not lost it. I am disappointed that an interim order, even on a limited basis, has been made against us, and I argued vigorously and cogently that it should not have been——

Mr. Wallace: rose——

Mr. Menzies Campbell: rose——

The Solicitor-General: My hon. Friend the Parliamentary Under-Secretary has mentioned the arguments that I advanced at the hearing—I believe that they were cogent. We shall continue to deploy these arguments at the substantive hearing of the infraction proceedings brought by the Commission——

Mr. Wallace: Give way.

The Solicitor-General: I shall not, because I want to develop points that are of interest to the whole House.
It is mistaken to believe, as some hon. Members appear to, that the whole legislation has been suspended. As my hon. Friend said——

Mr. Teddy Taylor: No one has said this.

The Solicitor-General: The precise effect of this order will depend on how many vessels which have hitherto had strong and often dominant connections with other member states, usually Spain, can establish that they are or


would have been ineligible for registration only by reason of the nationality provisions in section 14 of the 1988 Act; and that they are able in good faith to fulfil the other requirements for registration which remain in force.
The hon. Member for Banff and Buchan (Mr. Salmond) leapt up to ask why we did not introduce legislation that involved a residence provision. Before he takes that line in this sort of debate he might do the House the honour of reading the section that we are debating, because it does involve a residence condition——

Mr. Salmond: rose——

The Solicitor-General: I refer to the requirements in the 1988 Act as to residence and domicile of owners, charterers, managers and operators of fishing vessels seeking to register as British fishing vessels; and to the requirement that such vessels should genuinely be managed and their operations genuinely——

Mr. Salmond: rose——

Madam Deputy Speaker: Order. The Solicitor-General has made it quite clear that he does not wish to give way.

The Solicitor-General: Their operations should genuinely be managed——

Mr. Salmond: rose——

Madam Deputy Speaker: Order.

The Solicitor-General: I shall give way to the hon. Gentleman in a moment when he has listened. Vessels should genuinely be managed, and their operations should genuinely be directed and controlled within the United Kingdom.
When this matter was argued, and I was before Judge Due three or four weeks ago, the Commission said that only 10 or 12 vessels would be affected. It remains to be seen. The matter will be looked at carefully and quasi-judicially by my right hon. Friend the Secretary of State for Transport. The Commission's estimate may well be right. That was its estimate of the effect of the order. The background is that between 100 and 150 vessels, mostly of Spanish origin, had hitherto been fishing.

Mr. Salmond: I wish that the Solicitor-General had done me the courtesy of listening to my argument or even reading the reports of the Standing Committee. The amendments that I moved in Committee referred to the crew of fishing vessels, not owners or directors. There is no such stipulation in the legislation. Why does he not make one rather than bringing this ridiculous order before the House?

The Solicitor-General: I acquit the hon. Gentleman of not knowing everything about this case. There are residential qualifications in relation to important licensing conditions which are the subject of further litigation.
This issue has been bedevilled for years by litigation involving fishing interests that are trying to get the profitable opportunities of fishing against United Kingdom quotas. At every stage, the United Kingdom Government are defending and, where appropriate, prosecuting appropriate litigation to look after our interests, and will continue to do so.

Mr. Prescott: Several hon. Members believe that we are amending legislation, not suspending it. If the Solicitor-General is right, and we are suspending, and the court eventually rejects the interim decision and upholds our stance, will he have to come back to the House to amend the legislation again?

The Solicitor-General: I know that there are some who believe that we are amending rather than suspending, but that is a distinction without a difference. We are putting into suspension the nationality requirements, pending the judgment of the court. If the court's judgment were in our favour in every respect except in respect of the matters covered by the order, I think that we would still have to come back—this shows why it is suspending—because the purpose of this order runs only until there is final judgment in this case, just as the interim order of the court runs only to final judgment. It is a very technical point.

Mr. Menzies Campbell: rose——

The Solicitor-General: I apologise to the hon. and learned Gentleman, but I shall not give way.
I take the question, "Why should the House not vote against the order?" on the chin. It is Britain's duty to obey the law of the European Community.

Mr. Teddy Taylor: It is the duty of all countries.

The Solicitor-General: Whatever the outcome of the case may be, and however vigorously and effectively we argue the United Kingdom's case—and we shall argue it vigorously and effectively—before the European Court of Justice and the various courts in Britain to which, in one guise or another, the case will return, it is always our duty to obey orders, including the interim orders of the European Court. It is in fulfilment of that duty, and that duty alone, that the interim order of the European Court of Justice is to be given effect by the order. There are powerful and compelling reasons why we should fulfil that duty and I commend the order to the House.

Question put:—

The House divided: Ayes 68, Noes 21.

Division No. 353]
[3.49 am


AYES


Alison, Rt Hon Michael
Garel-Jones, Tristan


Amess, David
Glyn, Dr Alan


Amos, Alan
Goodlad, Alastair


Arbuthnot, James
Griffiths, Peter (Portsmouth N)


Ashby, David
Hague, William


Batiste, Spencer
Hamilton, Hon Archie (Epsom)


Bellingham, Henry
Hanley, Jeremy


Bennett, Nicholas (Pembroke)
Harris, David


Boswell, Tim
Hayward, Robert


Bowis, John
Heathcoat-Amory, David


Brazier, Julian
Hind, Kenneth


Burns, Simon
Hughes, Robert G. (Harrow W)


Burt, Alistair
Hunt, David (Wirral W)


Butterfill, John
Irvine, Michael


Carlisle, Kenneth (Lincoln)
Jack, Michael


Carrington, Matthew
Knight, Dame Jill (Edgbaston)


Chapman, Sydney
Lang, Ian


Chope, Christopher
Lord, Michael


Coombs, Anthony (Wyre F'rest)
Lyell, Sir Nicholas


Coombs, Simon (Swindon)
Maclean, David


Cran, James
McLoughlin, Patrick


Curry, David
Mans, Keith


Dorrell, Stephen
Martin, David (Portsmouth S)


Durant, Tony
Mills, Iain


Fallon, Michael
Nicholls, Patrick


Favell, Tony
Norris, Steve


Forsyth, Michael (Stirling)
Patnick, Irvine






Redwood, John
Twinn, Dr Ian


Shephard, Mrs G. (Norfolk SW)
Waddington, Rt Hon David


Speller, Tony
Wheeler, John


Stevens, Lewis
Widdecombe, Ann


Summerson, Hugo
Wood, Timothy


Taylor, John M (Solihull)



Thompson, Patrick (Norwich N)
Tellers for the Ayes:


Thorne, Neil
Mr. Greg Knight and


Townsend, Cyril D. (B'heath)
 Mr. Tom Sackville.




NOES


Aitken, Jonathan
Prescott, John


Barnes, Harry (Derbyshire NE)
Salmond, Alex


Campbell, Menzies (Fife NE)
Skinner, Dennis


Carttiss, Michael
Taylor, Teddy (S'end E)


Cryer, Bob
Wallace, James


Dixon, Don
Welsh, Andrew (Angus E)


Ewing, Mrs Margaret (Moray)
Welsh, Michael (Doncaster N)


Godman, Dr Norman A.
Wilson, Brian


Hughes, John (Coventry NE)



Janman, Tim
Tellers for the Noes:


Jessel, Toby
Mr. Frank Haynes and


Kirkwood, Archy



Nellist, Dave

Question accordingly agreed to.

Resolved,
That the draft Merchant Shipping Act 1988 (Amendment) Order 1989, which was laid before this House on 17th October, be approved.

STATUTORY INSTRUMENTS, &c.

URBAN DEVELOPMENT

Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Committees on Statutory Instruments, &amp;c.)

That the Bristol Development Corporation (Vesting of Land) (British Railways Board) Order 1989, dated 20th June 1989, a copy of which was laid before this House on 23rd June, be approved.—[Mr. Durant.]

Question agreed to.

Haddock Quota

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Durant.]

4 am

Mr. Alex Salmond: It is hardly surprising that I am here at 4 o'clock in the morning as this is my Adjournment debate, but it is a tribute to the importance that Members of Parliament representing fishing constituencies attach to the crisis in the industry that my hon. Friends the Members for Angus, East (Mr. Welsh) and for Moray (Mrs. Ewing), the hon. Member for Greenock and Port Glasgow (Dr. Godman)—the official Opposition spokesman on fishing matters—the hon. Member for the Western Isles (Mr. Macdonald), the saviour of Scottish Tories, the hon. Member for Southend, East (Mr. Taylor), and the hon. Member for Orkney and Shetland (Mr. Wallace) are here. I should also mention our silent partner, the Minister from the Scottish Office. He has had to sit quiet all evening, and, as is often his wont, no doubt he will sit quiet through this debate.
I hope that there will be no dispute about the severity of the situation facing the industry. The exhaustion of the North sea haddock quotas is the immediate cause of the difficulty, but only the immediate cause. The species is the mainstay of the Scottish fleet, and of the processing sector. Although the debate will be answered by a Minister from the English Ministry, I hope that he appreciates that important distinction between the Scottish and English fleets. Earnings in the fleet dropped last year, and will drop again this year, with the fall concentrated on the white fish sector. Worse still, the outlook for next year is also poor.
The vice in which the industry is caught is completed by spiralling costs, largely due to rises in interest rates. I hope that the Minister will acknowledge that, in terms both of the falling revenue and the rising costs, we are dealing with factors that are outside the control of the individual fisherman. Both the overall quotas and the level of interest rates are matters of public policy. They are not under the control of the individual fisherman. I hope that the Minister will answer a question that I have put to a number of his colleagues: what contribution does it make to the defeat of inflation generated in the south of England to wreck the finances through high interest rates of the fishing fleets in the north of Scotland?
I hope that there will be no dispute on the importance of the industry. Some 30,000 jobs, offshore and onshore in Scotland, between the catchers, the harbours, the shipyards, the processors, the distributors are dependent on fishing. Employment in this industry is almost as significant as employment in the electronics industry, although it may not provide as many photo opportunities for the Minister of State at the Scottish Office. It is the vital dominating industry around the coastline. It is one of the great natural resource industries of Scotland. It should be developed and enhanced, not crippled and undermined.
What we want above all from the Minister is a firm timetable for action to deal with the crisis. Two years ago, when I was first elected to the House, one of the first engagements that I took on was an invitation from the Scottish Fishermen's Federation to attend a discussion about licensing and structures policy, to respond to a Government discussion document that was released at that time. Little did I think that, some two years later, we would have made little progress in the discussions and


consultation. It is incredible that the whole licensing and structures policy of the industry has effectively been in hiatus for that time.
I understand that some indications were given in a letter earlier this week that was sent to the right hon. Member for Kincardine and Deeside (Mr. Buchanan-Smith), whose work for the industry is acknowledged on the Opposition Benches as well as on the Government Benches. I want to know when the Government's proposals are to be published. I want also an assurance that any aggregation within the licensing and structures policy will not favour the company sector against the share-owned boat, which is the typical pattern of ownership of the Scottish industry.
Decommissioning is another area where action is long overdue. I do not think that any Opposition Member would seriously argue that the decommissioning of the fleet is a complete solution, but it would make a contribution to a managed reduction of the over-capacity in the industry. Is it true that the Minister of Agriculture, Fisheries and Food has torpedoed a decommissioning proposal emanating from the Scottish Office? When I made the suggestion in the press a few weeks ago I was loyally upbraided by the Minister of State, Scottish Office, who accused me in a letter of "wild speculation". Unfortunately for the Minister of State, on the very day that he wrote that letter, 11 October, under the headline "Gummer Sinks Fishers Hopes", the Minister of Agriculture, Fisheries and Food, while speaking at the Conservative party conference, was quoted in the papers as pouring cold water on any decommissioning scheme. Yet after the Scottish Grand Committee debate in July the Scottish Office was openly briefing that there would be a decommissioning scheme this autumn. Indeed, in September, the Minister of State, Scottish Office, wrote to my hon. Friend the Member for Angus, East and stated that
progress is being made and we hope to he in a position to make an announcement in the not too distant future.
It seems to be clear that the Minister of Agriculture, Fisheries and Food is the stumbling block in stopping progress with the decommissioning scheme, and I shall use a few minutes of the time of the House to ask why that should be so.
There is the well known antipathy of the Minister of Agriculture, Fisheries and Food towards the Scottish fleet. After all, I am talking of the Minister who climaxed his speech, if that is the right description, to the Conservative party conference with a quote from "Henry V". Perhaps the play was rather over-used at that conference but the Minister referred to
this sceptred isle, …
This precious stone set in the silver sea".
The last words, of course, were
this England.
I do not think that we can be in much doubt where the political priorities of the Minister lie!
It could be that the Ministry of Agriculture, Fisheries and Food has built its opposition to decommissioning on a strategy of using the elimination of the flag of convenience boats to take out capacity in the fleet. It may be that the Ministry believes that by eliminating the flag of convenience boats from the fleet it could observe the multi-annual guidance premium. The best that can be said about that strategy after the previous debate is that it is

badly holed under the water line. I am tempted to say that, given the performance of Ministers in that debate, it is hardly surprising that we lost the case before the European Court of Justice.

Dr. Norman A. Godman: Might it not be that the present Minister of Agriculture, Fisheries and Food has painful memories of the way in which the previous decommissioning scheme was manipulated or exploited by certain Humberside trawler owners? If the Government are to behave humanely to our fishermen, however, they must introduce a decommissioning scheme vis-a-vis the multi-annual guidance programme obligations.

Mr. Salmond: I agree with the hon. Gentleman.
I was coming to the "guilty conscience" theory as a third explanation of why the Minister of Agriculture, Fisheries and Food might be so blatantly blocking progress towards a decommissioning scheme. The fishermen of Scotland and those of us on the Opposition Benches drew a sharp intake of breath when we heard the Minister regaling against "the widespread abuses" of the previous decommissioning scheme. Could that be the Minister who presided over these abuses and whose Ministry was so severely criticised in the Public Accounts Committee report on that very matter? If I remember correctly, the report questioned whether the Ministry had detailed knowledge of the finances of the fishing industry. I hope that the Government and the Minister do not claim that it is impossible to have an honest decommissioning scheme. If it were, that news had better be communicated to all the other member states that are implementing just such a scheme.
I am sure that the hon. Member for Greenock and Port Glasgow would agree with my recollection that the Public Accounts Committee did not argue against a decommissioning scheme; it said that the next one should be more effective—an honest decommissioning scheme and not just a route to siphon money towards some fishing companies that may or may not have had close relationships with the Conservative party.
The fourth explanation of why the Minister may be blocking progress is that the Fontainebleau agreement might mean that, although the European Community funds 50 per cent. of the decommissioning costs, and although they are charged against income tax, thereby giving a further gain, it may he that the Prime Minister is worried about her rebates—about getting her money back, as she so eloquently put it. If that is the case—and we need it put on the record—the Scottish fisherman will be deprived of access to European funding because of the Fontainebleau agreement and the Prime Minister's attitude to the European Community. I hope that the Minister will not follow his colleagues in blaming the industry. I hope that he recognises that no one accepts that explanation and no one believes it.
In The Sunday Times last Sunday—hardly a trenchant critic of Government policy—Alan Massie wrote:
The attempt made by John Selwyn Gummer, minister of agriculture, fisheries and food, to throw responsibility for the crisis back on the Scottish fishermen was a characteristically silly and shabby effort to evade Whitehall's responsibility.
So let us hear no more of the nonsense that fishermen are to blame. The Government's fishing policy is in total disarray.
The Opposition parties and the industry—both catchers and fish merchants—have offered the Government positive proposals on how to deal with the crisis. My colleagues and I put up a six-point plan and presented it to the Minister last week. We received a courteous hearing, but I wish that I could say that we had been given some sign that there would be imminent action. We proposed a lay-off scheme as an immediate response to the particular problems and to take some pressure off the scarce stocks. We proposed a decommissioning scheme, to which I have already referred. We proposed that there should be real action against industrial fishing in the North sea. I do not know whether the Minister is aware of this, but industrial fishing is taking 1 million tonnes of sand eels and Norwegian pout—the seed corn and the food source of the haddock stock in the North sea. Will the Government press for action against industrial fishing?
We proposed that the "Hague preference", the council resolutions of 1976, he given wider application. Those resolutions recognise that there are areas of the Community dependent on the fishing industry, such as Ireland and northern Britain which should be given preference in the application of the common fisheries policy. They could be used productively to help both the catching and the processing sectors of the Scottish industry. We also want to know when the Scottish Fishermen's Federation will be given a reasoned and positive response to its proposals on conservation such as mesh size enforcement, gear restrictions and action against the discarding of small fish.
Last in our six-point plan was our desire for the Minister to recognise that reliance on low quotas alone has proved a failure. Let us look at the haddock quota: over the past five years it has not once been overfished. Any assessment of quotas suggests that, given that the stock is now experiencing severe problems, the scientific assessment itself leaves much to be desired. We want to move the emphasis of conservation away from the low-quota system, which has failed, to other measures which can succeed.
Finally, let me emphasise that we have never argued that our plan—or anyone else's—holds all the answers; what we demand is that something be done. I believe that the measures that the SNP has outlined would bring stability and security back to the industry. Some of these, I accept, would have to be argued for at European level, but some are being blocked by the pure inertia and incompetence of the present Government. We shall continue to hound that Government and press this case until we secure the action that is so urgently required. We need that policy action to save the industry—and to save the communities which we represent.

The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. David Curry): The hon. Member for Banff and Buchan (Mr. Salmond) began by reproaching my right hon. Friend the Minister for his overuse of "Henry V" at the Conservative party conference. My right hon. Friend did, of course, quote Shakespeare, but he clearly knows his Shakespeare better than the hon. Gentleman, because he quoted from "Richard II": it was a speech of John of Gaunt, I believeI shall not waste further time on preliminaries, although I think that we should have our literary references straight.
The hon. Gentleman will no doubt know that yesterday—or, rather, the day before yesterday—we announced the allocation of the Hague preference for haddock. He will also know that that allocation went to the northern communities, which means predominantly Scotland—about 85 per cent. of that additional allocation, in total 5,360 tonnes. I am sure that he will recognse that that has caused disappointment and more among the English fishing communities, who are facing exactly the same strain as the Scottish fishing communities.
No doubt the hon. Gentleman will also be interested to learn that yesterday we completed arrangements for an additional 200 tonnes of North sea haddock for the whole of the British industry, by means of a swap with Germany. Together with the previous 400 tonnes swapped with France, and 26 tonnes from the Belgians, that takes the United Kingdom quota to 55,006 tonnes—which represents 88 per cent. of the entire EEC quota for North sea haddock. Just in case the hon. Gentleman wishes me to be precise, let me tell him that we gave back some pollack and megrim from the western areas.
I must make it clear that producer organisations that have overfished their allocations will not benefit from the additional allocation—although we recognise that it is a small one. We are pursuing the matter of further swaps, but, as everyone involved in the debate recognises, we are tackling the problem of a large amount of high technology pursuing a limited resource.
It is true that fixing quotas is a difficult matter. In 1989 we fixed North sea haddock quotas at 68,000 tonnes, on the basis of clear scientific advice. That followed evidence of poor recruitment and high catches of juvenile fish, which led to increased discarding and drove the spawning stocks to very low levels. We insisted that there should be a mid-term review in case the scientists had got it wrong. We had that review but it confirmed the assessment, and we decided that, as our priority was to rebuild a precarious stock, we would accept that assessment.
The advisory committee on fisheries management meets in the first week of November to recommend the 1990 total allowable catches. We shall seek action, as we have always done, on the basis of scientific advice. It is all too easy to say that the scientists have got it wrong—and fishermen have been saying that recently, and quite frequently. I must, however, warn the House against over-enthusiastic acceptance of political arithmetic. Scientists may not be infallible, but if we do not rely on objective data while seeking to improve the quality of that data, we shall find ourselves in the business of trading political multipliers, which will lead eventually to far too great a pressure on stocks.

Mr. Salmond: Will the Minister give way?

Mr. Curry: No. I am just about to answer some of the detailed points that the hon. Gentleman raised. I am sure that he would like me to do that.
First, he mentioned his programme, and I shall try to cover that as best I can in the time available. He asked about a laying-up scheme. There is provision under the council regulation 4028/86 for member states to provide laying-up premium in respect of temporary withdrawal of fishing vessels. I am not sure that that is appropriate for the current circumstances of the North sea fisheries. It was not intended for the short-term problem which exists in the North sea haddock fishery and the rates are set at low


levels. There was little interest in the earlier scheme between 1984 and 1986 because of the tight eligibility conditions. For example, the period of laying-up must be additional to normal laying-up and extend to between 45 and 150 days. Few vessels would qualify for such a scheme and in any case the scheme is not intended to fill the gaps in normal fishing activity. The danger is that a laying-up scheme might retain capacity which should go out of the industry. There is very little enthusiasm within the Community for such an approach, and, given the hon. Gentleman's enthusiasm for the Community, no doubt he would be anxious to secure its endorsement.

Mrs. Margaret Ewing: Market forces.

Mr. Curry: We have to reach a solution in which market forces have a role to play. I do not intend to stand at the Dispatch Box saying that it is the job of Government to manage every last iota of decision making in the fishing industry or any other industry. That is not the job of Government and I do not think that Government do it very well.
The hon. Gentleman asked me about decommissioning which is a complex issue. A full decommissioning scheme would be expensive. The National Federation of Fishermen's Organisations recently estimated that a full scheme would cost about £45 million. We need to be sure that such expenditure would be well used. That includes being sure that vessels which might be decommissioned would otherwise not have left the fleet. We also need to be sure that any capacity removed under a decommissioning scheme would ease pressure on the fish stock. That would not be the case if ineffective capacity were removed, leaving behind the efficient vessels. In practice, it is difficult to draw up a scheme which targets the efficient vessels. Those difficulties need to be addressed in deciding whether a decommissioning scheme might be introduced.
The hon. Gentleman asked several questions relating to the methods of management.

Mr. Salmond: Will the Minister give way?

Mr. Curry: No. The hon. Gentleman went on at length and then invited me to cover his six points. Perhaps I can do that first.
He mentioned several items which relate to methods of management. He made suggestions for dealing with the discards, and I know that there are schemes which would require the landing of all fish caught. I know that there is a proposal for multi-annual quotas. Those are alternative management systems. The hon. Gentleman will know that the present Community system is based on total allowable catches, minimum landing sizes and mesh sizes and gear restrictions. Everyone recognises that it is not a perfect system, but it is probably the best way. If we were to allow people to land the fish that they had caught when the fishery was closed, we simply would not have quota management at all.
I say seriously to the House that shortly we shall enter difficult negotiations in Brussels in the context of the mid-term review of the entire fisheries policy. It would not be sensible for the United Kingdom, which has significant advantages under the present system, to suggest that we want to throw that in the air. If we did that there are plenty of other people who would jump in immediately. We have

spent one and a half hours discussing the problems of quota hoppers and Spanish interlopers. I cannot imagine the enthusiasm that there would be in some continental countries to see the status quo being challenged by the United Kingdom.
It is absolutely essential that everyone in the industry makes it clear that they are committed to the legal operation of the quota system and the full observance of the rules. Those who tout illegality are simply indulging in a form of suicidal self-indulgence.
The hon. Member for Banff and Buchan mentioned conservation, about which I am more in agreement with him. Suggestions have been put forward by the Scottish fishermen's organisations and other organisations across the United Kingdom. However, those organisations do not all agree about what they should like to see done. The suggestions cover mesh sizes and shape, restrictions on gear attachments—including the length of the extension piece and measures to prevent the ballooning of the cod end—the prohibition of the carriage of illegal gear and the one-net rule, to which I know that Scottish fishermen are particularly attached.
We are examining those interesting ideas and shall shortly send to Brussels a paper suggesting measures based on the project put forward by the industry.
The hon. Member for Banff and Buchan mentioned industrial fishing. We believe that the present Community controls on industrial fishing provide an adequate level of control and that there is no scientific base for banning the practice completely. By-catches of human consumption species in the North sea have fallen considerably to low levels and do not pose a threat to stocks. If that position does not continue, we shall have to reconsider it.
The hon. Member for Banff and Buchan mentioned licences. The present ban on licence transfers that involve increases in tonnage or engine power is causing the industry problems. We shall shortly issue proposals that will provide more flexibility for fishermen when transferring licences and will not lead to an increase in the total capacity of the fleet. These measures will involve the aggregation of fishing vessels' licences.
Suggestions have been made—I realise that the hon. Member for Banff and Buchan did not lend his name to this suggestion, but it is important that I should refer to it—that there should be an amalgamation of quotas: for example, that the United Kingdom quota for the west of Scotland haddock could be amalgamated with that for the North sea. There is much west of Scotland quota left, and, at present catch levels, about 15,000 tonnes would be available. However, it would be caught in the North sea and not in western areas.

Mr. Salmond: I want to return to the question of decommissioning. The Minister has been extremely hostile to the prospect of a decommissioning scheme. His tone is entirely different from that of the Scottish Office. Will he confirm that there is tension between his Department and the Scottish Office on the decommissioning scheme, and that his Department is effectively vetoing a decommissioning scheme that would otherwise be supported by the Scottish Office?

Mr. Curry: I made it clear that we are retaining the decommissioning scheme as one of the options under consideration. I made it clear that it is an expensive option. We realise that there are targets that we must attain. We


have yet to decide which would be the best combination of measures to achieve those targets. When we reach that decision, it will be a decision of all the fisheries departments and of the Government.

Mr. Andrew Welsh: When?

Mr. Curry: We will reach those decisions shortly.

Mrs. Margaret Ewing: This side of Christmas?

Mr. Curry: Yes, certainly.
The Spanish have entitlements to west coast stocks. If the stocks were to be amalgamated with North sea quotas, what possible grounds would we have to deny access to the North sea to Spanish vessels? To attack the present system would destroy the credibility and force of the British argument for continuing the essential structures and operation of the common fisheries policy.
I realise that the industry is facing great difficulties. It is equally true to say that the Scottish fleet went through a period of significant profit and well-being in the mid-1980s. It made major investments in its capacity and was earning a 15 per cent. return on capital.
A single idea will not resolve the present difficulties. Fishermen are individuals; fisheries have their own characteristics, but the problems that they face are very different. We are seeking to achieve a healthy, modern fleet that can take its own decisions on the basis of as much stability as we can achieve in the context of a common fisheries policy and a resource that is limited, moves around the sea and is subject to biological change. We must rely on a disciplined approach to fishing. Stocks must be maintained to ensure their conservation and the opportunity for British fishermen—I use the term "British fishermen" deliberately—all around the coasts of the United Kingdom. This must be in the framework of a fisheries policy that meets our interests and conserves our advantage.
We shall shortly be taking important decisions, because the mid-term review will be of capital importance to the British fleet. We are determined to defend that interest in the future, as we have done in the past, to ensure that the United Kingdom remains a significant fishing nation.

Question put and agreed to.

Adjourned accordingly at half-past Four o'clock.